Your mission Jim....

[ducati916]

A + B = C + D

risk A + risk B = total risk + return

first problem is how to get A and B to equal zero. The second problem is how to avoid a -D when C is zero.

Both have solutions

Just been having a nosy through the derivatives forum, when I chanced upon this little nugget. The answer, is of course, arbitrage which by definition is risk free and self funding. The formula is as follows;

S + P = C + X/(1 + Rf)*

S = Stock
P = Put
C = Call
X = Strike
Rf = Risk Free Rate
* = Time [as an exponent]

jog on
d998

 

[bingk6]

Just been having a nosy through the derivatives forum, when I chanced upon this little nugget. The answer, is of course, arbitrage which by definition is risk free and self funding. The formula is as follows;

S + P = C + X/(1 + Rf)*

S = Stock
P = Put
C = Call
X = Strike
Rf = Risk Free Rate
* = Time [as an exponent]

jog on
d998

OK, so how do we use it to make money

 

[jeffreytp]

Hi Money Tree,

I am interested in your webiste and risk free strategies. Can you please contact me?

Thanks,

Jeff