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r/optionsr/options· u/Sufficient-Flan1565· 6d ago 40

Weird arbitrage in SPY options?

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User questions a seemingly risk-free box spread arbitrage in SPY options yielding $188 on a $5000 max loss.

SPY
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Hey Folks,

I am looking at this trade in my account. It looks like a box spread. I am confused why it's giving a mid credit of 51.88 USD when maximum loss is limited to 5000 USD. So you make 188 USD risk-free?! What am I missing?

It's basically a call bear spread and a bull put spread with both spread same expiry and same strikes. In this case because both spreads are 50 points apart, you never can lose more than 5000 USD no matter where SPY lands on Dec 18, 2026.

https://preview.redd.it/q73g7qbtcx8h1.png?width=1367&format=png&auto=webp&s=da8b0f95fe97ece4935df8151a2d0ef4549e0c49

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