GME and Call/Put parity. via /r/wallstreetbets #stocks #wallstreetbets #investing


GME and Call/Put parity.

I've noticed a big divergence in the spread between the prices between Puts and Calls on gamestop.

Usually if such a divergence in pricing doesn't exist because of dark pools and market makers doing risk free arbitrage.

Like right now you can create a synthetic short by selling an ATM call and buy an ATM put and assuming the midway prices between the ask/bid you would get 58 cents.

You would then be able to lock in that credit by buying a share of gamestop.

Literally risk free money right there.

Now I know this is dark pools bread and butter so I'm wondering how does this opportunity exist.

Only thing I can think of is they can't find the shares to hedge the arbitrage.

Anyone have any insight?

Right now call volume to put volume is about 2 to 1

Open interest on the other hand there is about twice the number of puts then calls.

Expiring tomorrow there is about 129,000 calls expiring and about half are out of the money but 20,000 are at $45 and 30,000 at 50 according to barchart.com

That's about 50 million shares they would have to buy if it goes in the money on a 50million float that market makers would have to buy.

Edit:Nobody arbitrage this it would only work if you had crazy leverage available and orders processing through you. Like if you were a dark pool. If your a retail buyer your just going wind up getting assigned.

I'm only asking why does this exist and to such an extent. Hedge funds know this opportunity exist. They snap this stuff up in seconds. So why aren't they snapping this up.

Submitted February 19, 2021 at 07:48AM by darksoulmakehappy
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