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Traders perform conversions when options are relatively overpriced by purchasing stock and selling the equivalent options position. When the options are relatively underpriced, traders will do reverse conversions or reversals. In practice, actionable option arbitrage opportunities have decreased with
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One reason a trader may take this position would be to extend the holding period of the underlying position for
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market to earn small profits with very little or zero risk.
104:purposes, while locking in the current price.
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42:the advent of automated trading strategies.
116:(or reverse conversion) position is:
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204:Options as a Strategic Investment
156:date. The resulting portfolio is
93:date. The resulting portfolio is
206:(4th ed.). Prentice Hall.
148:The call and put have the same
85:The call and put have the same
202:McMillan, Lawrence G. (2002).
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30:is a trading strategy using
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180:Synthetic options position
241:Derivatives (finance)
185:Volatility arbitrage
18:Conversion (options)
175:Options strategies
236:Options (finance)
102:capital gains tax
28:Options arbitrage
16:(Redirected from
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197:Option Arbitrage
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170:Binary option
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225:Categories
191:References
154:expiration
152:value and
142:underlying
140:short the
91:expiration
89:value and
80:underlying
52:conversion
46:Conversion
231:Arbitrage
78:long the
32:arbitrage
164:See also
114:reversal
108:Reversal
36:options
34:in the
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150:strike
87:strike
137:, and
131:short
75:, and
59:short
208:ISBN
125:call
121:long
69:long
63:call
135:put
73:put
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