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i should have mentioned never to use limits when legging into/out of a spread.. Its one thing to put in the limit order to execute as a spread,but when we choose to leg one side to save .05, you may find yourself coughing up 1 dollar on the exposed leg that got away from you..

If there is no liquidity and wide markets,a newbie will get punished unmercifully in transaction costs. It not like the newbie is a market maker buying on the bid and selling on the offer.

If you are trading a highly liquid instrument and the option market is .01 wide,I would place market orders. If the market is .15 or more wide,I would lean towards a limit order.It really depends on my level of urgency. IMHO,newbies try to squeeze out pennies splitting markets,and when the...

Almost impossible.. AMD is pretty dam liquid with tight markets.Even if you accidentally typed in to sell at .01,on a 1.60 option,you would probably be filled at 1.55 ish..

Sure,5 point vertical as in the 100-105..The "width" is 5 points..2.5 debit for the spread would be 1 to 1 risk reward..

Ok,you passed the sniff test:thumbsup: Without accounting for vol/skew,I'm not sure how you deem a vertical to have edge.. With that said,I think your approach and incorporating verticals works well for you and that could be a an edge.. Im pretty sure you dont feel that any vertical...

I agree that understanding verticals is a very good building block,but in no way can anyone say that any vertical trading for less than half the strike width offers "edge"..Its just not true,and even if it were,it's a gross over simplification. Get a good basic book on Options and hopefully...

You are heading down a very slippery slope. Verticals offer no "edge" unless you believe the skew to be significantly mispriced. What books on Options are you currently reading?

Would you please define "edge" and being "right". The statement in bold is highly debatable

Profitable

If there was enough edge,and it looked like I could trade into a conversion I would participate and bang out the 30 delta call and/or grab the 30 delta put while buying futures..I didnt need sheets to trade...

I would delta hedge my positions a bit more..Im not sure what edge Market Makers have in highly liquid tight markets. To get in to a position,I legged everything..That was my edge,I.e.leaning on customer bids and offers..

I never delta hedged as a market maker.. The markets were much wider,and 80 percent of my profitability was reversals, conversions and boxes..I would also trade butterlys and condors.. It was very EASY to make money back then

Hey there Ocho, I dont think you are 100 percent correct in your statement regarding vol impact on Butterflys.. Intuitively, when you have butterflys that are far out if the money,it would make sense that you would need a pop in vol to have them increase in value as higher vol would imply a...

If a BWB is a split strike fly,you are simply short a vertical.Im guessing your risk reward is 1 to 1,5 point long a 5 point vertical + short a 10 point vertical,same short strike

Did you trade XMI?

Wow,and I thought I was conservative... Thats a whole new meaning brother:)

We must have been down there together I was Salomons floor trader

As he said,he is now long a condor or possibly butterfly at really bad prices... Before He was risking 1.50 to make .50,now he is risking 1.15 to make .85. Depending on where the short put spread/vol has blown out to,it may not be the worst thing in the world. I most likely wouldnt cover the...

Dam,you beat me to it... I never played Bridge,but there were several really good bridge players on the floor who were also very good traders.. Did you ever trade on the Amex?