# Strategy Help Please



## Capricious (29 January 2016)

Hey all,

I am new to both this forum and investing in general, and one of the things I have been looking at are options.
For a few of the stocks I have looked into, I've noticed that there have been Call options where the exercise price has been sufficiently lower than the Put option exercise price. These options expire on 25/2/16 and are American Style Options.

So the way I've worked it out in my head, I buy both Call and Put options. I exercise the Call option and get the shares for a reasonably lower price than market value, and then after acquiring the shares, exercise the Put option and sell them for a profit.

The Call I am looking at is currently priced at $0.395 and has an exercise price of $1.35.
The Put I am looking at is currently priced at $0.585 and has an exercise price of $2.20.
They are for the same share and are both American Style.

What I wanted to ask, is why these haven't been snatched up?
I am no genius, so if I can see this, anyone else can.

Can someone shed some light on this please?


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## Capricious (29 January 2016)

NVM, after a bit more research, I found the out that I did not completely understand how the pricing works.

I would delete this thread, but I have no idea how.


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## cynic (29 January 2016)

Capricious said:


> NVM, after a bit more research, I found the out that I did not completely understand how the pricing works.
> 
> I would delete this thread, but I have no idea how.




At times I see newcomers to derivatives asking similar questions, so may I suggest that you post what you've found with your further research as it may be helpful to others in the future.


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## Capricious (31 January 2016)

cynic said:


> At times I see newcomers to derivatives asking similar questions, so may I suggest that you post what you've found with your further research as it may be helpful to others in the future.




I think I will do that Cynic, as my confusion stems from misinformation from other websites/blogs, where the writers were just as confused as I was, and either never figured things out, or did not bother sharing the information. 
My confusion seems quite silly in hindsight now, but I will share what I found out regardless.

I was looking at Fortescue Metals Group LTD (FMG, trading for $1.52 on Thursday the 28th of Jan 2016).

There call option I was looking at:
Ex Price = $1.35
Ask = $0.395
This is an American Style Option

The way I saw it, based on the bad information I had access to was that the whole option costs $0.395, which is untrue. That is the price per share in the option, of which there are 100, so the option costs 39$ not $0.395.


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## boliu (5 March 2016)

Capricious said:


> Hey all,
> 
> I am new to both this forum and investing in general, and one of the things I have been looking at are options.
> For a few of the stocks I have looked into, I've noticed that there have been Call options where the exercise price has been sufficiently lower than the Put option exercise price. These options expire on 25/2/16 and are American Style Options.
> ...




Hi:
   the put option always more than call option price.


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## hamli (5 March 2016)

boliu said:


> Hi:
> the put option always more than call option price.






Not "always".


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