I am using the Robinhood app and see call options with breakeven prices below the current stock price.

Is there a reason why you wouldn't just buy this option and then sell it off immediately afterward?

Here is what I saw:

Current Price = $3.24

Strike Price = $3

Break Even = $3.12

Contract Price = $0.12

Why couldn't you buy this and then sell it immediately if your breakeven price is below the current stock price? Would you make the difference in profit?


If those are the respective real time quotes then yes, you could do a Discount Arbitrage (buy call, exercise call to acquire stock, and sell stock. To avoid slippage, you'd buy a Synthetic Put via a Combo Order (buy the call and short the stock) and then exercise the call to close the position.

The reality of these 'free lunch' situations is that:

  • you're probably not evaluating this based on the respective bid and ask prices, or

  • you're looking at the last trade's price (the quote is stale), or

  • it's bad data

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