Is it that bad trading SPX? Is there no competition between market makers for getting orders? For example, if I want to Sell a Vertical Call Spread 100 times with a market of .7 / 1.00 I would place it at .85 and see what happens. Perhaps lowering it to .8 but I wonât give more. Another question, for example the above mentioned spread should have a market of .8 / 1.10 is it possible they quote it at .7 / 1.00 because the Market Makers have the âfeelingâ you are selling (like with Iron Conders)?
Anybody trading 100+ SPX options per order
- Thread starter DutchMan
- Start date
Is it that bad trading SPX? Is there no competition between market makers for getting orders? For example, if I want to Sell a Vertical Call Spread 100 times with a market of .7 / 1.00 I would place it at .85 and see what happens. Perhaps lowering it to .8 but I wonât give more. Another question, for example the above mentioned spread should have a market of .8 / 1.10 is it possible they quote it at .7 / 1.00 because the Market Makers have the âfeelingâ you are selling (like with Iron Conders)?
ES options are electronic, it trades the same hours as the ES futures but don't expect any good markets after hours. The serial options expire into the current quarter ES and the quarterly options expire into cash like the futures do.
There is not really any competition between market makers in the SPX, if you try to cut the market you will not survive long. I am not saying there is zero competition, but there is not enough to make much difference. The herd mentality of the pit is to keep their monopoly strong so they can exploit it. I traded the NDX extensively before the ISE came a long and it was a night and day difference. Competition between exchanges is very good for the public, and the SPX has none.
You will not usually get vertical call quote .30 cents wide, and if you put any order in at the "fair value" point you will most likely never get filled. They will usually give you the worst market they can, and it will not be the real market. As Optioncoach has suggested if you get a market of say .60 at 1.20 then the midpoint is .90 and you can try to split the mid and your side. So if you wanted to buy try 1.05 and sell at .75. These are all just generalizations though. You need to call and get a market, then you HAVE to know what the real fair value is to know where to put your order. You can on occasion get good quotes and good fills, but over time you will not be happy with how you are treated.
Yes, the market makers usually know what side you are going to do (that is part of the job) and make markets accordingly.
There is not really any competition between market makers in the SPX, if you try to cut the market you will not survive long. I am not saying there is zero competition, but there is not enough to make much difference. The herd mentality of the pit is to keep their monopoly strong so they can exploit it. I traded the NDX extensively before the ISE came a long and it was a night and day difference. Competition between exchanges is very good for the public, and the SPX has none.
You will not usually get vertical call quote .30 cents wide, and if you put any order in at the "fair value" point you will most likely never get filled. They will usually give you the worst market they can, and it will not be the real market. As Optioncoach has suggested if you get a market of say .60 at 1.20 then the midpoint is .90 and you can try to split the mid and your side. So if you wanted to buy try 1.05 and sell at .75. These are all just generalizations though. You need to call and get a market, then you HAVE to know what the real fair value is to know where to put your order. You can on occasion get good quotes and good fills, but over time you will not be happy with how you are treated.
Yes, the market makers usually know what side you are going to do (that is part of the job) and make markets accordingly.
I haven't traded it yet (only receiving quotes for Iron Conders and some vertical spreads) but I have the feeling the MM are quoting it in there favor. So you think your placing it at midprice but in the end you are trading way of midpoint...spreads are ok. 5 point Iron Conder with a spread of .30 (via a Trading Desk)
There are a lot of newbies who think that selling options, via verticals, naked or ICs is a good strategy and can provide income. Every professional knows this will not work in the long run and has a very poor risk/reward ratio. There is nothing wrong with any particular option trade in and of itself, but they are usually used incorrectly by the ill-informed. Everyone knows that most traders fail and for some reason people think that they can use options to help them overcome the odds. Options are complicated and take years to really understand, but they are just another trading vehicle and thus you must know how to trade before trading options.
I don't believe in the word "income" when used in conjunction with "trading". It is possible in some cases when you have very strict discipline and go for very moderate percentage returns like Max Ansbacher, but even he has been relatively lucky.
I'm not a newbie
I have been trading options for about 3 yrs now and Iâm very profitable trading the so called âincome generatingâ strategies. Of course there not income strategies, Market Makers donât give away free money. Although European market have been very volatile (in January it dropped 15% in just 2 days) my max. drawdown in the last 12 months is about 3%. I'm from Europe and trade European indices but because of the market downturn and the low values of those indices I'm looking for new markets. Second, my size is getting serious, it's not a hobby anymore but work so by trading US markets I have more time to watch my position (thatâs why the title is 100+ per leg / order). US markets is new for me, especially Open Outcry because in Europe everything is traded electronic.
Imho winning or losing has to do with the driver of the car. You can put me in the best sports car in the world but I will smash it in to the walls. Give me an option strategy and I will end up with a profit. I understand my strategies and without an OptionVue or something, I know exactly where the risk is of my positions (vola, theta, gamma, delta, etc).
I would rather prefer talking about execution quality of SPX & OEX (and perhaps NDX and RUT) than option strategies (are they profitable or not). But thanks for the feedback
