I’ve been pondering this question since looking a put options for MCD today where I found two options for a credit spread that resulted in a credit $0.01 higher than the width of the spread.

I was looking at buying the $215 put and selling the $217.5 put which has a spread of $2.5 and a max loss (as I understand it) of $250 without taking credit received into account.

Upon looking at the trade, I would have been able to gain a credit of $2.51 if had initiated the trade which results in a max loss (again, as I understand it) of -$1. Which means no matter what happens, I still end up pocketing $1 at minimum.

My only concern would be assignment, but since a credit spread comes with both a short and long leg, if both are in the money I’d still walk away with profit since I can exercise the long leg.

Is there any reason why this would be a bad idea? What are the downsides to such a trade?

1 Answer 1


If this is a $215/$217.5 vertical spread for a credit of $251 then you have indeed found a risk free position and you will make $1, assuming that you do not pay commissions or assignment/exercise fees.

The downside to this trade is if MCD expires between the strikes. If you do nothing at expiration, you will be put the stock at $217.50 (buy it) and your $215 put will expire worthless. When the market opens Monday morning, you will be net long the stock with no protection. So that means that you will have to either:

1) Close the position just before expiration, possibly incurring commissions and definitely losing something on the B/A spread (bye bye guaranteed profit), or

2) Adjust the position (same problem as #1 and the risk/reward will shift).

My gut feeling is that there is something amiss here.

Perhaps you are looking at stale quotes rather than in real time?

Perhaps you are not evaluating the position correctly. Are you looking at live quotes and using the respective bid and ask prices (sell at the bid and but at the ask)?

My best guess is that you are subtracting the ask price of the $215 put from the ask price of the $217.50 put and that's why you think that a credit is available for this spread.

  • It was only for a very brief moment, but the two had quite a wide spread and the bid was higher on the $217.5 than the ask of the $215. I believe it to be either a glitch in the prices, or a very rare occurrence, or both. Feb 7, 2020 at 1:15
  • The bid was on the $217.5 put will always be higher than the ask of the $215 put because the $215 put is $2.50 more out-of-the money, perhaps $2 or more if you were looking at this near the close. Either way, that has nothing to do with risk free possibility. MCD has active options so I doubt that this is a glitch. To evaluate this properly, you need to present the real time prices of the bid price of the $217.50 put and the ask price of the $215 put, along with the stock's price at that moment. Feb 7, 2020 at 2:00

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