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Replies to #22812 on Cycle Trading
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vikita

03/23/21 12:26 PM

#22814 RE: Duma #22812

Well my theory is that if these both will have different returns then there will be opportunity to create a box strategy(unless you are with Robinhood like me and cant create a Box spread)
Its like almost risk free money.

Debit Call Spread Debit Put Spread
+18.05 sell 340 call -3.73 Buy 340 put
-44.17 buy 310 call + .55 Sell 310 put

26.13 Debit 3.18 Debit
total debit 29.31

irrespective of direction and price at expiry, it will always have value of 30.00 so a sureshot return of 0.69

But this will not happen as Bid ask spread at call and put somehow will make sure there is no such opportunity(or will be exploited by machines before we do)