In the dynamic world of trading and investments, finding strategies with high success rates can be a game-changer. If you're on the hunt for a reliable option strategy that offers significant returns with minimal risk, the box spread might just be what you need. 

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Let's dive into the mechanics of setting up a box spread using the United States Oil Fund (USO) that boasts a 99% chance of winning as an example.

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Understanding the Basics of a Box Spread

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A box spread, often referred to as an "options arbitrage," involves simultaneously entering into both a bull and bear spread position. It's a method favored by traders looking to exploit pricing inefficiencies within options markets.

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To have more context on the following, click here to watch this video: How Does Box Spread Options Trading Strategy Works? - YouTube

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Here’s how to set up a basic box spread:

1. Sell a Put: You start by selling a put option at a lower strike price. In our example, that’s a 75 put.

2. Buy a Put: Buy another put at a higher strike price, for instance, an 83 put.

3. Buy a Call: Simultaneously, you buy a call option at the lower strike price (75).

4. Sell a Call: Finally, sell a call at the higher strike price (83).

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This combination creates a scenario where the outcomes are both predictable and restricted, leading to an incredibly high probability of earning a profit.

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The Mechanics of the Strategy with the USO

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Using the United States Oil Fund (USO) as our asset, a box spread is established between an 83 call and 75 call for the option series, and between an 83 put and 75 put. Here's a breakdown of the costs and revenues:

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- Buy a 75 Call: $346

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- Buy an 83 Put: $393

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- Sell a 75 Put: +$13

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- Sell an 83 Call: +$4

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The net outflow (also known as net debit) when setting up this box spread is $722.

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Price Scenarios and Outcomes

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What makes this box spread particularly interesting is its behavior under different price scenarios as the expiration date approaches:

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- If the price is above 83: The purchased put spread becomes worthless, but the call spread gains a value of $800.

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- If the price is below 75: The call spread turns worthless, while the put spread also achieves a value of $800.

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- If the price is somewhere in between (like 79): Both sides are slightly in the money by $4 each, leading the total value to $800.

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In all cases, subtracting the initial debit of $722 leads to a guaranteed profit of $78. Remarkably, this represents over a 10% return on your investment in a single day!

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The Allure of Options Arbitrage

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Strategies like box spreads are excellent examples of options arbitrage, where traders benefit from market inefficiencies and price discrepancies through meticulously structured trades. These strategies are rare but highly valued for their near-certain profitability.

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Expanding Your Trading Horizons

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While options arbitrage like the box spread offers 'guaranteed' profits, mastering them requires understanding and experience. Opportunities in trading are vast, and each strategy comes with its own set of risks and benefits. 

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Strategically, the box spread is an excellent starting point for traders looking to employ a mechanical approach to secure predictable returns.

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Whether you're a new trader or someone looking to refine your strategies, learning about various options techniques can significantly benefit your trading journey. 

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Remember, in the world of stocks and trading, knowledge not only enhances your strategy—it empowers your investment choices.

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Unlocking Your Trading Potential

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Curious to learn more about how to master such strategies? Why not join our free Next Level Options Masterclass? It’s designed to elevate your trading skills and understanding of complex strategies like the box spread. 

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[Next Level Options Masterclass]

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Additionally, joining our Telegram group can connect you with a thriving community of like-minded traders, all sharing insights and tips. Don’t miss out on opportunities to expand your trading arsenal with strategies that can lead to success in manipulated markets and beyond!

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