RIO 3.09% $99.99 rio tinto limited

did i get ripped off here?

  1. 3,033 Posts.

    today I called Rivkin options desk and said I wanted to write a RIO strangle. I was given 2 quotes, 29/38 for the call, and 76/90 for the put. As I normally did, I split the spreads, giving 33.5 for the call and 83 for the put. Added them together, and instructed the broker to sell at 10 @ 33 + 83 = 116c. The trade went through instantly, and I was shocked, thinking it must have been too cheap.

    Then I look at my watchlist, and see there were only 10 contracts of each traded today, at the exact time I did mine, but the prices were different.

    RIOQH C 25/09/2003 34.00 0.385T 0.385T 0.830 14:08 10
    RIO2G P 25/09/2003 29.00 0.880T 0.880T 0.910 14:08 10

    Quite weird, I thought.

    Then tonight, I downloaded the latest OCH values. RIOQH is 38.5 and RIO2G is 88. This totals 126.5c, yet RIO had not changed in price. How is this possible? If fair value was midpoint of the spread, which I sold at @ 116, how is possible that I have lost $1050 on a position that has not gone against me?
    The ask prices were 38 and 90, but with such large spreads, how is it possible that the OCH valuations are so close to the ask prices?

    I smell a rat.
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