Timeline for Is this legal: going long on call options and artificially increasing the price of the underlying asset seconds before expiration?
Current License: CC BY-SA 3.0
11 events
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| Aug 27, 2020 at 5:10 | answer | added | Bob Baerker | timeline score: 0 | |
| Oct 25, 2018 at 17:16 | history | edited | Bob Baerker |
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| Oct 24, 2018 at 12:32 | history | edited | Bob Baerker |
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| Oct 22, 2016 at 21:58 | comment | added | CQM | @Aganju pockets don't need to be as deep as you think. I explained in my answer. When you are taking advantage of inefficiences caused by market maker delta hedging, cheap options contracts will move 100x as many shares, so you can scalp. I explain more in my answer. But close to expiration you can easily get 100% moves in the options contracts at the money for just a few cent moves in the stock. | |
| Oct 22, 2016 at 19:29 | answer | added | CQM | timeline score: 0 | |
| Oct 22, 2016 at 17:37 | answer | added | quid | timeline score: 5 | |
| Oct 22, 2016 at 17:25 | comment | added | quid | You do realize you're buying shares and options from other entities and selling them to other entities. The quoted price is just the last transaction price, it's not like a market clerk comes out to reprice the asset, and the quoted price isn't necessarily the next transaction price. You would only be able to buy or sell a given asset if a counterparty wanted to sell or buy that asset regardless of the current quote. | |
| Oct 22, 2016 at 17:21 | comment | added | equityandoption | The profit you make depends on the volume of call options vs the liquidity of the underlying assets. The more illiquid the market, the better. Also, you don't need to pour billions to create a price spike that lasts a few seconds. For certain companies, I believe a couple million is way more than enough. By the way, why don't you think it's possible to own the majority of one particular call option? | |
| Oct 22, 2016 at 13:32 | comment | added | Aganju | There are typically no options for small trade volume stocks. For large volume stocks, you would need to pour literally billions in the market to move the stock price as you'd like to, and you probably wouldn't be able to own 'the majority' of the options either. Also, I doubt your math that you make more on the calls than you lose on the later sales - I rather think it should even itself perfectly out. So you end up needing incredible deep pockets, pay a fortune in transaction costs, and make nearly nothing at the end. - I am not a lawyer, but I don't see why it should be illegal anywhere. | |
| Oct 22, 2016 at 8:06 | review | First posts | |||
| Oct 22, 2016 at 9:15 | |||||
| Oct 22, 2016 at 8:02 | history | asked | equityandoption | CC BY-SA 3.0 |