Is this option arbitrage?

[johnymm]

Is this option arbitrage?
For instance: A broker has the following prices of MSFT june call 30:

sell: 1, buy 1.5

Another broker has:
sell: 1.6, buy 1.7

So when you buy from the first broker at 1.5 and sell at the second for 1.6...that is 1.6-1.5= 0.1.

You receive 0.1 in total...but is your position secured until expiration?
It seems likely that you can receive an early margin call on your short position?

10x

 

[tripleogstar]

yes, there are no risks to that, thats a locked in profit lf 0.1 ticks. How could you receive a margin call? you don't have a short position, your simply buying the call @ 1.5 and selling @ 1.6, you've closed your position out. Your profit would probably be eroded by broker fees anyway.

 

[MrGecko]

I think the point here is that the two trades are being made with different brokers; the short option will be marked to market, but the gains in the long option position will be held with another broker. You cant offset the "losses" without realizing the "profits" (unless you have deep pockets).