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Strategies & Market Trends : ahhaha's ahs

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To: ahhaha who wrote (8727)	12/12/2006 9:33:34 AM
From: CapitalistHogg™	Read Replies (1) of 24758

Question: What is the catch? A pure arbitrage play is staring us in the face. Take a look at NFLD. The Jan. 12.50 puts (DHQ MV) IV's are high in relation to the Jan. 12.50 call (DHQ AV) IV's. If one sets up a reversal (shorting the common, selling the put, and buying the call) it looks like a riskless profit could be made of about .70 per order upon expiry. This exact set up happen on 12/8 at precisely 13:50; somebody shorted 100,000 NFLD shares @ $17.11, sold 1000 12.50 puts @ $2.95, and bought 1000 calls @ $7.10 for an approximate profit of 80,000 dollars! What am I overlooking? T.i.a.

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