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Bogan

Bogan
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  • Anatomy Of A Dividend Arbitrage - Buy CVI Monday, Sell The March $50 Covered Calls [View instapost]
    I think you have been arbed as the OCC will adjust the strike by $5.50 so you are short the $44.50 calls. The OCC will have published an announcement.
    Feb 1, 2013. 07:17 AM | Likes Like |Link to Comment
  • Implementing Dividend Arbitrage: Verizon Wireless [View article]
    There is no premium involved in buying the options. In fact as Chemfro mention you will cross the spread selling the calls to begin with. If you want an example of how well arbitraged these trades are look at PM US 60 Strike Jan Calls 269,563 i.e 27 million shares worth traded on the 19 dec 2011 (the day before the div) open interest the day before was only 6,632! the next day open interest was 125 ... anyone short those calls would have been diluted 40 times before ex date i.e. if you were short the whole 6,632 calls over 660,000 stock you would have received about 300 shares worth of div!! There is no arbitrage in these trades for the average punter rather the money you think you are making is by implicitly selling the long dated put and funding someone elses position.
    Jan 4, 2012. 07:51 AM | Likes Like |Link to Comment
  • Implementing Dividend Arbitrage: Verizon Wireless [View article]
    This strategy is completely flawed. You will likely be called away before the div (just look at the open interest in any long dated deep ITM call after a decent div has been paid) VZ Jan 2014 20 strike calls have next to no open interest. All you have done is lend the other side of the trade $20 for free until the next div. Call me next time you want to do this trade.
    Jan 3, 2012. 02:51 PM | 1 Like Like |Link to Comment
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