OK, can't I just SELL "350 @ $395 and BUY "340" @ $391 and pocket $4 immediately and realize another $10 if and when the counter party who bought "350" decides to exercise? I'm not bothering with a synthetic call arbitrage argument here, which, by the way, should yield $14 riskless profit. Can anyone please explain to me what's wrong with my reasoning or with the option chains?

2 Answers 2


You reasoning is fine but the quotes you are looking at don't seem current. I see, as of yesterday's close, 377.50 x 382.00 on the 350 calls, so the strategy you suggest would cost you $13 of premium. The spread will change once the market opens in a few minutes.


enter image description here

Above is the snapshot for this Google January 2018 call.

The key to this OP's question is 2 fold. Stale quotes, as you can see the bid/ask nowhere near the last trade prices. And the low open interest.

Your reasoning fails in that the orders would never fill at those prices. The spread is so deep in the money it would sell for over $9, in my opinion, not give you a credit to trade.

Think of it this way, say there was no credit, but you could enter the trade at $1. You would get 10X your money if Google simply doesn't drop by half in 20 months.

Last - when you see these prices that make no sense, just enter an order. What do you have to lose? Of course, I mean an order you want to fill, like a $4 credit, or even $1 credit. You'll quickly see the bid and ask adjust for your order. (Which, if I'm back after the market opens, I might just do, and post that image. Done)

This is the bid/ask at today's open. The bid/ask spreads are wide enough, you'd never enter as a market order. It would fill at $10 or slightly under as a limit order.

enter image description here

  • 1
    thank you, sir. I had been under the wrong impression that option chains updated (well, displayed) according to the "no-arbitrage" argument first and foremost. I would have entered the order too, but I'm sitting at the children's table with play money so far with StockTrack.
    – ak87
    Apr 26, 2016 at 13:10
  • I'm also assuming that other mispricings that appear further down the chain are also due to stale quotes...
    – ak87
    Apr 26, 2016 at 13:26
  • Yes, exactly... Apr 26, 2016 at 13:36

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