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Intel Corporation Message Board

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  • yourwishismine yourwishismine Nov 2, 2012 3:10 PM Flag

    OPTION ABITRAGING IN FULL SWING

    Ok, but are the buying Puts, Calls or something else? And Yes I don't understand how they "steal" the dividend by doing so...

    Sentiment: Strong Buy

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    • They buy the deep calls for zero premium and sell a higher strike call that has a premium. The combined buy/sell is a neutral transaction on its face. The paired transaction is neutral so it it does not affect the trading price that much. How else could they take a 40,000,000 share position in one day without dramatically affecting share price.

      They will exercise the deep calls today and own shares for the dividend.

      They will have sold the call options and will be able to exit the share positions when they calls are assigned.

      • 3 Replies to alexander.dumbass
      • Ok, I guess, hence when the little man (me) always loses when we up against someone who cheats right in front of the ref...

        Sentiment: Strong Buy

      • "..They will exercise the deep calls today and own shares for the dividend. "
        ---------------------------------------------------------------------------------------
        in that case the open interest next week should stay around the same as today or it will not increased by much...

        will be interesting to see

      • They buy the deep calls for zero premium and sell a higher strike call that has a premium. The combined buy/sell is a neutral transaction on its face. The paired transaction is neutral so it it does not affect the trading price that much. How else could they take a 40,000,000 share position in one day without dramatically affecting share price.

        They will exercise the deep calls today and own shares for the dividend.

        They will have sold the call options and will be able to exit the share positions when they calls are assigned.
        ----------------------------------------------------
        ok, selling the higher strike make sense. just the same the option MM by selling short is just lowering the price of the calls. The option MM care less about the stock pps, he/she makes money by arbitrage. the more ppl buy the better for MM.

    • calls since give you the option to purchase the shares and get the divy.
      puts - option to sale the intel shares - no shares = no divy

      • 1 Reply to mystk7
      • So we should see a huge UP swing near close then if I follow that right... I see that the option market maker, by shorting the stock protects him/her self by lowering the stock price to a level below where they will have to sell and can even make a profit on the stock... I think I followed that right...

        Sentiment: Strong Buy

 
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