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Good advice!

This is not necessarily the case. Even in stocks with wide markets on the options, the spread markets can be tight. If both legs of your spread were in the money on the last trading day, it is likely you would not give up much edge selling it out if you enter the order as a spread.

@ajacobson Interesting, thanks for posting. It would be appreciated in the future that you credit where you got the information from instead of just cut and pasting.

@Sig, another thing to consider if you are mainly trading the SPX is how your order is handled. With most brokers, if your order is over a certain size it is sent to the broker in the pit. In my experience, this is almost never a good thing. All of my orders, no mater how big are sent into...

It would be cheaper for me to trade SPX through a firm like Think or Swim (TD) I have a good rate now, but I have to eat the exchange fees which can be an additional .61. It seems most commission rates at TD include that fee. For equities I am much better off where I am now, plus with...

Mark is 12.61. It is based on the Feb monthly expiration opening prices in the SPX. I was seeing 5000 lot bids for the out of the money puts. Puts that went out at .05 yesterday, opened at .25 today. These big bids skewed up the mark. You can see the exact strikes on the CBOE web page, but...

Seeing huge bids on out of money SPX puts, suggesting a VIX markup this morning. We will see.

Its similar to buying a bond. You still get the same interest that you thought you would, even if interest rates change. The bond is just worth less if interest rates increase.

Bob, I remember way back the market maker clearing firms hated this as they made a substantial amount of profit on the overall debit /credit spread on their customers accounts. Is this the case with brokers today? Would Wedbush, IB or any of the others notice or care?

Exactly. Say you have $100,000 in your account. You put a spread on where you buy $200,000 worth of stock and deep puts to protect the position. You may have minimal risk margin, but you will be borrowing $100,000 extra from your broker to finance the position. If you sell $100,000 worth of...

The conversion price is based on the cost of carry of the position and dividends received. If interest rates go up, the cost of carry will increase and the conversion will decrease in total price, as it will now cost the buyer more to hold the position. Your existing position will be worth less...

I have made a few posts recently about this. Your implied rate of about 2.1% is about what I have been seeing as well. I assume you are saying you are selling the 1000/2000 box as opposed to saying you are selling 1000 to 2000 total boxes? Even wider boxes will trade as well, so your...

My advice to you would be going with an smaller introducing broker such as Lightspeed or Eroom Securities (this is where I currently trade). Lightspeed will introduce to Wedbush, Eroom introduces to Apex and Merrill. Dealing with these types of firms will get you excellent customer service...

Risks of a conversion are, If there is a dividend, it is reduced, Upward change in the interest rate, If the stock is hard to borrow, you "lose" the hard to borrow value over time, Pin risk (you hold to expiration and the stock settles around the strike price so you are not sure if you will be...

As others have mentioned, the answer changes based on what products you trade, as some brokers do not include the extra exchange fees for the SPX and VIX which can be up to .62 cents extra. Others will give you the adding liquidity fees when you route to certain exchanges. So to give you the...

I would actually see this spread a lot on the floor. It is called a call (or put) stupid. Yes, not making that up. For example the broker would quote the Jan 2000/2010 call stupid. Always thought that was funny. I actually enter this every now and then. When I get a good sale on a...

I see the same thing Bob, C2 gives .42 cents back on single leg equity customer orders adding liquidity in penny classes, which is the best of all the exchanges. On non penny classes, Bats and Pearl are the best at .85 with C2, Nasdaq at .80 rebates (as of December).

Exactly. And if you had the opposite positon it would be even harder. Say you had 10,000 with your main broker and bought 10 SPX calls/puts for 1. To hedge them with another broker you would have to go short them which would require about $300,000 worth of equity in the other account.

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That's true, but the point of my thread was I think that these options have been underpriced, relative to the potential gain. So if you played these each expiration you can come out ahead. I haven't done any studies, just something for everyone to look at.