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+444 Part IV: Additional Considerations 
+could be bought - short stock and long 2 calls. Inversely, a listed straddle could be 
+bought against a ratio write - long stock and short 2 calls. The only time the arbi­
+trageur should even consider anything like this is when there are more sizable mar­
+kets in certain of the puts and calls than there are in others. If this were the case, he 
+might be able to take an ordinary box spread, conversion, or reversal and add to it, 
+keeping the arbitrage intact by ensuring that he is, in fact, buying and selling equiv­
+alent positions. 
+THE EFFECTS OF ARBITRAGE 
+The arbitrage process serves a useful purpose in the listed options market, because it 
+may provide a secondary market where one might not otherwise exist. Normally, 
+public interest in an in-the-money option dwindles as the option becomes deeply in­
+the-money or when the time remaining until expiration is very short. There would be 
+few public buyers of these options. In fact, public selling pressure might increase, 
+because the public would rather liquidate in-the-money options held long than exer­
+cise them. The few public buyers of such options might be writers who are closing 
+out. However, if the writer is covered, especially where call options are concerned, 
+he might decide to be assigned rather than close out his option. This means that the 
+public seller is creating a rather larger supply that is not offset by a public demand. 
+The market created by the arbitrageur, especially in the basic put or call arbitrage, 
+essentially creates the demand. Without these arbitrageurs, there could conceivably 
+be no buyers at all for those options that are short-lived and in-the-money, after pub­
+lic writers have finished closing out their positions. 
+Equivalence arbitrage - conversion, reversals, and box spreads - helps to keep 
+the relative prices of puts and calls in line with each other and with the underlying 
+stock price. This creates a more efficient and rational market for the public to oper­
+ate in. The arbitrageur would help eliminate, for example, the case in which a public 
+customer buys a call, sees the stock go up, but cannot find anyone to sell his call to 
+at higher prices. If the call were too cheap, arbitrageurs would do reversals, which 
+involve call purchases, and would therefore provide a market to sell into. 
+Questions have been raised as to whether option trading affects stock prices, 
+especially at or just before an expiration. If the amount of arbitrage in a certain issue 
+becomes very large, it could appear to temporarily affect the price of the stock itself. 
+For example, take the call arbitrage. This involves the sale of stock in the market. The 
+corresponding stock purchase, via the call exercise, is not executed on the exchange. 
+Thus, as far as the stock market is concerned, there may appear to be an inordinate 
+amount of selling in the stock. If large numbers of basic call arbitrages are taking 
+place, they might thus hold the price of the stock down until the calls expire.