What Is a "Box Spread" Arbitrage Strategy in Options? ⎊ Path

What Is a “Box Spread” Arbitrage Strategy in Options?

A box spread is a four-legged, zero-risk options strategy that involves a combination of a bull call spread and a bear put spread, both with the same two strike prices and expiration. Theoretically, the net cost of the four options should equal the difference between the two strike prices, discounted to present value.

Any deviation from this theoretical value presents a risk-free arbitrage opportunity.

How Does a Synthetic Long or Short Position Relate to the Components of a Box Spread?

What Is a Common Options Spread Strategy That Involves Selling OTM Options?

What Is a “Box Spread” and How Does It Utilize Synthetic Positions?

What Is the Relationship between the Put-Call Parity and the Box Spread Strategy?

In a Bear Market, Which Option Type Is Generally Preferred by Buyers?

Can a Box Spread Be Used to Create a Synthetic Loan or Deposit?

How Is a Box Spread Used to Calculate Implied Interest Rates in the Options Market?

What Is a “Bear Put Spread” and How Does It Limit Risk Compared to Buying a Single Put?

Glossar

Risk-Free Arbitrage

Exploitation ⎊ Risk-free arbitrage in cryptocurrency derivatives represents the simultaneous purchase and sale of an asset across different markets, or in different forms, to capitalize on transient pricing discrepancies without exposure to directional risk.

Box Spread

Arbitrage ⎊ A box spread is fundamentally an arbitrage strategy, constructed by simultaneously buying a bull call spread and selling a bear put spread with identical strike prices and expiration dates.