Options trading in OZ - 'Reopening' discussions

[rolly1]

Hmm ok thx. How do you arb out the mispricing then without taking directional risk?

 

[cynic]

In case it hasn't already been mentioned, unloved calls, can sometimes be paired with shorts (over the underlying) for the purposes of creating a synthetic put.

 

[wayneL]

Hmm ok thx. How do you arb out the mispricing then without taking directional risk?

Depending on where the mispricing is, with a conversion or a reversal

Long stock plus long put and short call of same strike and expiry = conversion.

Short stock plus short put and long call of same strike and expiry= reversal.

These can also be used to get flat / lock in a profit where you do not want to sell the underlying position....

But be aware of assignment risk.

 

[rolly1]

Hard to imagine you are gonna earn anymore than the cash rate with the lock. Anything more juicy and the big boys will have this arbed away in seconds.

 

[wayneL]

Hard to imagine you are gonna earn anymore than the cash rate with the lock. Anything more juicy and the big boys will have this arbed away in seconds.

Correct.

True arbitrage is just not a realistic proposition for we retail traders.

 

[Santafe]

What could be safer than writing a covered call​

Started a new thread with this opener. But thought worthwhile adding here.

I am bewildered at my Broker CMC to actually suggest that there be too much risk involved in writing covered calls????

What could be safer than writing a call on an underlying stock that you already hold with no margin attachment?

And yet they tell me the only way I can have access to their online platform to write covered calls is by reaching level 5 ASX options trading level.

I have reached already options level 2., whereby I were led to believe I would be eligible to write covered calls, as that is how they explained it to me when I enquired of them.

Only to then find out when it came time I wanted to do so, that the only covered call writing eligible for at level 2 on CMC Brokers is a Buy - Write facilitation, where you purchase the underlying and write the covered call at the same time.

This is totally inflexible on CMC's account and virtually useless to somebody who would hope to purchase a stock at a low price then hold for some appreciation in price and then write the covered calls for a higher premium.

What is even more insulting from CMC is the fact that while they limit you on writing covered calls at level 2 option trading, they will however non the less oblige you in doing exactly that if you phone in your order to do so at a cost of double the standard option fee of $30 to the then phone brokerage service option trade of $60

Really CMC, who do they think they are fooling with such a cockamamie scam rip off agenda as this.

So now after having enough time with previous experience trading options on the USA market back in the early 2000, with no real demand on option level trading levels of acceptance, and really with no great ambitions to trade options on margin, just a hope to generate some extra income on selling covered calls against underlying held margin free stock. I am hit with the ridiculousness of CMC Brokerage narrative of risk management to deny me as much.

Go Figure.

Now I have to get some extra learning on a whole lot of options style trading that I predict will never have a need for to reach level 5 ASX criteria, just to do simple covered call trading.

What rubbish.

Alternatively, I may end up over at Interactive Brokers where I am sure they would be more formidable, and fees are definitely cheaper on option trading.