Re: newbie question about options
 

[ QUOTE ]
What on earth is montage?

[/ QUOTE ]

Some options are traded on more than one exchange at the same time. In fact, there are 5 options exchanges in the US, and many (most?all?) options are traded on all 5. Every now and then the same exact option is traded on one exchange for one price and another exchange for another price. This opens up a profit opportunity. All you have to do is buy it on the exchange where its being sold for less and turn around and sell it on the other exchange where its trading higher. Insta-profit. This imbalance between exchanges is called montage. (mon-tazh)

Re: newbie question about options
 

[ QUOTE ]
[ QUOTE ]
What on earth is montage?

[/ QUOTE ]

Some options are traded on more than one exchange at the same time. In fact, there are 5 options exchanges in the US, and many (most?all?) options are traded on all 5. Every now and then the same exact option is traded on one exchange for one price and another exchange for another price. This opens up a profit opportunity. All you have to do is buy it on the exchange where its being sold for less and turn around and sell it on the other exchange where its trading higher. Insta-profit. This imbalance between exchanges is called montage. (mon-tazh)

[/ QUOTE ]

I an options market maker on of the exchanges. I've never heard this term.

Re: newbie question about options
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
What on earth is montage?

[/ QUOTE ]

Some options are traded on more than one exchange at the same time. In fact, there are 5 options exchanges in the US, and many (most?all?) options are traded on all 5. Every now and then the same exact option is traded on one exchange for one price and another exchange for another price. This opens up a profit opportunity. All you have to do is buy it on the exchange where its being sold for less and turn around and sell it on the other exchange where its trading higher. Insta-profit. This imbalance between exchanges is called montage. (mon-tazh)

[/ QUOTE ]

I an options market maker on of the exchanges. I've never heard this term.

[/ QUOTE ]

What is the term for what I am describing?

Re: newbie question about options
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
What on earth is montage?

[/ QUOTE ]

Some options are traded on more than one exchange at the same time. In fact, there are 5 options exchanges in the US, and many (most?all?) options are traded on all 5. Every now and then the same exact option is traded on one exchange for one price and another exchange for another price. This opens up a profit opportunity. All you have to do is buy it on the exchange where its being sold for less and turn around and sell it on the other exchange where its trading higher. Insta-profit. This imbalance between exchanges is called montage. (mon-tazh)

[/ QUOTE ]

I an options market maker on of the exchanges. I've never heard this term.

[/ QUOTE ]

Sorry, I'm a dork. The term I meant was arbitrage not montage. Duh.

Re: newbie question about options
 

[ QUOTE ]
In fact, there are 5 options exchanges in the US

[/ QUOTE ]

In fact there are 6. CBOE, AMEX, ISE, PSE, PHLX, and BOX. BOX (Boston options exchange) is fairly new though so I guess that's the one you missed.

[ QUOTE ]
Every now and then the same exact option is traded on one exchange for one price and another exchange for another price

[/ QUOTE ]

I can assure you this almost never happens. Ocassionally but not often enough to make any money on. It is very very rare.

Re: newbie question about options
 

People that start posts like this don't want links. They want someone to explain options to them in 1-2 minutes so that they can get their options knowledge on par with their acute understanding of stocks.

I'll help him out.


An option is the right but not the obligation to buy a stock at your excercise price. If that's not right, who cares.

Re: newbie question about options
 

[ QUOTE ]
[ QUOTE ]
What on earth is montage?

[/ QUOTE ]

Some options are traded on more than one exchange at the same time. In fact, there are 5 options exchanges in the US, and many (most?all?) options are traded on all 5. Every now and then the same exact option is traded on one exchange for one price and another exchange for another price. This opens up a profit opportunity. All you have to do is buy it on the exchange where its being sold for less and turn around and sell it on the other exchange where its trading higher. Insta-profit. This imbalance between exchanges is called montage. (mon-tazh)

[/ QUOTE ]

Isn't that arbitrage?

eastbay

Re: newbie question about options
 

[ QUOTE ]


Isn't that arbitrage?

eastbay

[/ QUOTE ]

Yea, I'm a dork. I corrected myself above.

Re: newbie question about options
 

[ QUOTE ]
People that start posts like this don't want links. They want someone to explain options to them in 1-2 minutes so that they can get their options knowledge on par with their acute understanding of stocks.

I'll help him out.


An option is the right but not the obligation to buy a stock at your excercise price. If that's not right, who cares.

[/ QUOTE ]

That's only a call, what about a put option? Which is the right to sell a stock at the strike price. If you really don't care if anything you post is correct then why bother posting?

Re: newbie question about options
 

Yes, the holder of a put option has the right to sell at the exercise price K.

You can have 'american style' options which allow you to exercise at any time up to the expiry time, and 'european style' that allow you to exercise only AT the expiry time.

An american call is worth the same as a european call provided there are no dividends to be paid.

This is not the case for a put option for all interest rates >0.