Tasr

I rarely trade options. My only problem is a small fear that my shares might get called in...and I'll have to buy out of the Arb. Or if it closes @90 on expiration day.

You know the other saying...nothing is free. :)
 
just made some calculations given present borrowing costs.

that $1.30 edge that riskarb mentions is eaten away completely and even more to may expiration.
 
Quote from VOLUME:

I rarely trade options. My only problem is a small fear that my shares might get called in...and I'll have to buy out of the Arb. Or if it closes @90 on expiration day.

You know the other saying...nothing is free. :)
More...

For 1.30 in edge I would take that risk all day long. And if its trading at 90 on expiration day going into the last 5 minutes, you can leg out of it giving back only a small amount of edge.
 
Quote from mgarc:

just made some calculations given present borrowing costs.

that $1.30 edge that riskarb mentions is eaten away completely and even more to may expiration.
More...

You better recalculate the cost of carry.
 
absolutely... my point was the arb was available by lifting offers and hitting bids. It's there due to the restricted short condition.

Certainly the edge net of carry isn't $1.50

riskarb
 
Quote from VOLUME:

I rarely trade options. My only problem is a small fear that my shares might get called in...and I'll have to buy out of the Arb. Or if it closes @90 on expiration day.

You know the other saying...nothing is free. :)
More...

A good point re: call-risk, but I wouldn't be concerned with pin-risk; this sucker may be trading 50 or 150, but I doubt we close at 90.

riskarb
 
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