HOLLYWOOD STOCK EXCHANGE
THE ENTERTAINMENT MARKET
THE ENTERTAINMENT MARKET
It's a "Convergence Trade"... i.e., arbitrage
My example is a convergence trade, and it's also the best case scenario of a convergence trade. Because Change-Up will open at a SINGLE, determined price, the cash-out value on all three securities (the OW, the call, the put) will CONVERGE on that single price -- and I capture 100% of the possible profit from convergence. For every 1 time I make that trade, I will profit $2.66 (minus commission) no matter what Change-Up opens at.
Arbitrage? Aug 01, 19:20
Star Bonds can be arbed. Aug 01, 20:29
I think my example is pure arbitrage -- 100% probability of making a profit doing this trade sequence with derivatives.... Aug 01, 20:46
If i Learned correctly.... Definitely not Pure Arbitrage Aug 03, 17:04
Not my understanding Aug 03, 23:16
yeah its not ARB unless its already made more money than what the stock or bond is trading at {nm} Aug 04, 07:30
I disagree, it IS 100% arbitrage....(Dorfman et al.) Aug 04, 21:25
It's a "Convergence Trade"... i.e., arbitrage Aug 04, 21:36
No, a convergance trade only involves 2 assets Aug 04, 23:04
alfpaul -- convergence involves two POSITIONS, not two ASSETS - nm Aug 09, 20:31
I see your point Aug 04, 23:10