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Playing & Trading Strategy

Guaranteed, not maximised

Posted by: srrichardson on Feb 17, 07:51 in response to bloopster's post Yes, I'm familiar with arbitrage. It makes sense when...

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7:40 AM

When the options were IPO'ed they were at neutral profit (for most 5 options at $5 each, 1 will delist at $25, the rest will delist at $0 so no guaranteed profit at the IPO).  I'm not sure the players would appreciate HSK putting in something to make the prices of each option in a category affect each other so that a set of options were never ARB.  Having said that, while you may be guaranteed a profit, you won't maximise it - say there were options in a category priced 18, 1, 1, 1 and 1 - if maxed them all you'd make 60,000, but if you'd shorted the ones priced at 1, you'd have made 220,000 if the one priced at 18 did win, but risked making a big loss if it didn't - but that's the point of the game, do you take the safe small profit or go for the riskier big profit?





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