Expirationless Options (XPOs)- The Next Big Thing Message Board

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Strategies & Market Trends : Expirationless Options (XPOs)- The Next Big Thing

XPO 141.32

+0.2%

3:59 PM EST

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To: VLD3 who wrote (26)	7/8/2005 10:21:30 PM
From: Tech Master	Read Replies (1) of 60

Good point about the strike prices not moving in lockstep without creating arbitrage. If a $50 stock has an XPO struck at $50 at 45%, the XPO sells for $22.50. If it moves in lockstep with the underlying stock, the $70.00 strike would have to sell for $2.50. You could sell the $65 strike for $7.50, buy three $70 strikes, and your results would be definitely non-linear. Its pretty obvious that XPOs can't move in lockstep with the underlying. If the market makers or old school thinkers want to try it that way, I'm happy to be in there picking up some seriously underpriced XPO options along the way until they go broke or figure it out.

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