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Why do some options series appear to be trading significantly under their exercise value?

April 26, 2017appear Exercise Options SERIES significantly trading value

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Why do some options series appear to be trading significantly under their exercise value?

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Due to stock splits, mergers, and other corporate activity, certain options series do not settle into round 100 share lots. Because of this, these options may give the appearance of being significantly under-priced. However, that is normally not the case as securities markets are extremely efficient and risk-free arbitrage profits are extremely unlikely (in the markets, there is no “free lunch”). Please know in advance the settlement terms of any option you are trading. Zecco Trading will not be held liable for mathematical, informational, and/or financial mistakes made by our customers due to not knowing the underlying terms of securities (options or otherwise) that they are trading. For more information on option contract terms and more, please check out www.theocc.com, and/or www.cboe.com.