SPOT / Futures arbitrage using OPtion on both

[MOka]

POT- FUTURES arbitrage using options!

I was wondering if anybody in the know can help me find a flaw in the following thinking

In theory one can arbitrage between SPOT price of an asset and Future price of that asset
However in reality at retail level this is perhaps impossible
But using Options I am wondering if it is doable
So first
The conventional Theoretical arbitrage =
- Asset is SPOT trading at 1000 and Future is trading at 1020
- LONG Spot @1000 and SHORT Futures at 1020
- Hold till expiry when both settle at same
- Arbitrage of 20 point if the cost to carry the $1000 + brokerage etc is < 20

EVEN if above is possible one has to come up with large capital for Margin both positions and they will be naked positions subject to margin call
Thus the pay out may not be worth it

Now what if we use OPTION which mimic the same meaning Deep in the money Options on SPOT and Options of Futures

LONG Deep in Money Option on SPOT
SHORT Deep in the money Options on Futures

Same theory and at much less capital outlay the tiny yield might be worth it

Any thoughts?

 

[gaurav.agnihot]

lol ol lolo ololololololololololol

 

[global trader]

and your point Gaurav is????

 

[Anarchist]

where are u going to get option on future...

 

[global trader]

The Index Options in Indian markets are they Option on SPOT price of teh Index or teh Future price
By the way yes you cna get OPtions on Futures in US market