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That was the previous method. Starting today, they IPO at the same price as the equivalent on Cantor Exchange. {nm}
Posted by: Antibody on Jan 12, 19:25 in response to fourstars' post They IPO three months before the movie opens wide at the...
how are CX derivatives priced? SPrasad2 Jan 12, 18:50
when you figure that out, let me know mickpix Jan 12, 19:13
They IPO three months before the movie opens wide at the exact price of the movie stock. From there they move as any other stock. {nm} fourstars Jan 12, 19:23
That was the previous method. Starting today, they IPO at the same price as the equivalent on Cantor Exchange. Antibody Jan 12, 19:25
However, since they never adjust, the derivative can end up being way under or overpriced and ending up as an obvious ARB or BRA situation. {nm} fourstars Jan 12, 19:25
that makes sense--but why price them as arb on day 1? unless i'm missing something, all three IPOs today have ~$10 riskless spreads on them {nm} SPrasad2 Jan 12, 19:38
There isn't any arbitrage between MST and CX Derivatives, because their values are tied to box office, not to each other. {nm} Antibody Jan 12, 19:51
except that both have to delist at the same price, right? SPrasad2 Jan 12, 19:59
That's a fair point. The decision was made to mimic Cantor Exchange. {nm} Antibody Jan 12, 20:05
It wouldn't be possible to be ARB or BRA on Day 1 because there won't have been any box office reported on Day 1 secretstalker Jan 12, 20:10
the individual CX deriv isn't--but the spread certainly is an arb trade since the MST and CX must delist at the same price {nm} SPrasad2 Jan 12, 20:15
You'd have to come up with a different term for that... true, one or the other could be overpriced/underpriced secretstalker Jan 12, 20:27
except that the MST is both about adjust and delist. also, meant arb only in technical sense of riskless profit. SPrasad2 Jan 12, 20:38
this whole conversation is pointless, since Antibody said they are IPOing CX at Cantor Exchange prices, end of story ndmaster Jan 12, 20:58
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