The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we are answering another question that was sent in from a user, so again, thanks for sending in your question. The question was, “Can you buy and sell the same option contract at the same time and then basically, generate a profit?” And so, the short answer to this is no. This is where the bid ask spread in most cases, comes into play and the reason why the bid ask spread is generally in place is so that there's no free arbitrage opportunity. An arbitrage opportunity in the market would be where you could buy a contract for say $10 and immediately sell it back for $11, effectively taking a minute’s time of risk. But in most liquid options and practically, all liquid options, this does not exist because of the bid ask spread. Let’s just use an example here because I think it might help out. But if we’re looking at say USO which is the oil ETF fund, you can look at the 15 strike call options on USO… And I'm just l