closing an options position

[fusiforme]

Would like to get some thoughts from the forum about closing positions using limit or market orders.

Yesterday I tried to close 10 contracts on a losing position using a limit order. I thought ten contracts were the standard size and that I would encounter no problem; but as it turns out, nine contracts closed at my limit price, and one was left.

Is this a common occurrence when using limit orders to close a position?

My broker told me the stock must have moved and I would need to close the remaining contract separately. I did this, but at this time the stock had fallen even further in price and the broker's commission was far larger than the profit to me, so it seemed pretty pointless.

Any advice on the best way to avoid this situation in the future?

 

[newwurldmn]

Don't put in marketable limit orders. If you aren't hitting the bid or lifting the offer then you aren't guaranteed a fill.

 

[FrankSlaughtery]

Quote from fusiforme:

Would like to get some thoughts from the forum about closing positions using limit or market orders.

Yesterday I tried to close 10 contracts on a losing position using a limit order. I thought ten contracts were the standard size and that I would encounter no problem; but as it turns out, nine contracts closed at my limit price, and one was left.

Is this a common occurrence when using limit orders to close a position?

My broker told me the stock must have moved and I would need to close the remaining contract separately. I did this, but at this time the stock had fallen even further in price and the broker's commission was far larger than the profit to me, so it seemed pretty pointless.

Any advice on the best way to avoid this situation in the future?

it just means that there was only 9 contracts on the bid side at that price and if you wanted to get filled on the rest you had to move your price down (prob the smallest tick possible).

this is common in low liquidity options that's why i stay away from them.

your broker is correct.

it's not pointless to sell at a lower price - esp if price hit your stop. trust me i've been in the EXACT same position where i had a loss on an option and the loss was like 50% and i said "well it's pointless to sell now i'll just hold til it comes back" and i held to expiry and lost 100%. i know it was stupid but guess what - i have never done that since so i learned the lesson which is important b/c i paid for it.

remember it's better to salvage most or even some of a position than to lose all of it.