Options with Tight Bid/Ask Spreads

This is a discussion on Options with Tight Bid/Ask Spreads within the Futures & Options forums, part of the Markets category; Originally Posted by tommy2tone Hi All I also was wondering who is your broker?...

Reply
 
LinkBack Thread Tools Search this Thread
Old Jul 11, 2014, 5:45pm   #9
 
lloydbee's Avatar
Joined Jun 2009
Quote:
Originally Posted by tommy2tone View Post
Hi All
I also was wondering who is your broker?
__________________
It's A Risky Business

Last edited by lloydbee; Jul 11, 2014 at 5:45pm.
lloydbee is offline   Reply With Quote
Old Aug 22, 2017, 1:30pm   #10
 
1 Posts
Joined Aug 2017
Quote:
Originally Posted by tommy2tone View Post
That would be nice but it is not the case. Few options have spreads that tight. For example, right now MasterCard (which has a moderately liquid options market) 13 Dec 805 calls bid:3.70 ask:4.85 - a spread of ~20%. And this is quite common.

It can make risk management very challenging.

A way to avoid any worry about spreads is to choose a Strike Price and enter a random Bid/Ask PREMIUM of YOUR choice, beyond the given range, to your favour.

If you were SELLING a CALL, given your example, wanting the best price you can get, ASK $5.20 or $6.10. The price of MA has to rise to get your ASK Premium, if it does, and the MA Call Option gets SOLD, the range made no difference.

Conversely, say BUYING a CALL OPTION, BID $3.40 or $2.50 knowing the share price of MA has to drop for you to get the Call Option price you BID.

In either case, if you don't get YOUR bid/ask, move on, forget about it, try again tomorrow, try Selling NAKED PUTS ON TSLA as it tumbles, as Captain MUSK leaves the sinking ship. BE PATIENT!!!
Democratis is offline   Reply With Quote
Old Aug 27, 2017, 4:35pm   #11
 
Windlesham1's Avatar
Joined Jul 2003
Stock options are terrible-use an index option- the index doesn't sleep with its secretary, it doesn't make shock announcements, or profits warnings that move it 30%. Only use stock options for fun,tiny trades.
Windlesham1 is offline   Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Similar Threads
Thread Thread Starter Forum Replies Last Post
Do bid/ask Spreads Vary Throughout The Day? tradingjamie Spread Betting & CFDs 4 Nov 27, 2013 10:57am
MT4 CFD With Tight Spreads? Doomberg Spread Betting & CFDs 11 Mar 12, 2013 8:51pm
new broker tight spreads ggecko2005 Forex 2 Apr 21, 2006 5:40pm
1 point spreads and join the bid/offer! fillyerboots Spread Betting & CFDs 1 Nov 3, 2005 10:08am

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)