Daytrading options

earth_imperator said:
Here's an example data of a wide B/A spread with certain volume and many waiting orders:
Code: 
          "bid": 2.45,
          "ask": 3.3,
          "bidSize": 264,
          "askSize": 110,
          "bidAskSize": "264X110",
          "totalVolume": 50,
...
What about this possible strategy:
jump inbetween with say a 10% better offer, and wait a while (max 5 minutes or so) for a fill, then let the B/A restore to previous levels, and then repeat with the reverse...
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If you are trying to scalp, you want to be as close to the bid, preferably, a couple of ticks higher, say bid $3. You jump ahead of the market maker in the order queue. If you get filled and the stocks move by a huge amount, chances are good, the stock option is now higher than your entry point, say $4. Now, it is up to you to manage your trade. Set a mental stop on when to get out. Use a trailing mental stop. Option price moves to $5, you could set your stop loss at $4.50 and try and get out near that price. I would give up a few ticks to close it out, even at $4.30 or $4.20. Lock in that profit when you are scalping.
 
smallfil said:
Not in a day. What I meant is if I just let the trend continue, I could have pocketed $5,000-$7,000. That was in the span of 1-2 weeks. Just comparing it to the day trading where I made the measly $500 each day trade on NVDA. Greed took a hold of me and I was happy with the $500 at the time. Working on tightening my stop losses on my swing trades. I think I have to keep the stop losses tighter. I will see how it goes. Slippage is a serious issue that can have a huge effect on profits or losses on each trade. There will be losses too that has to be dealt with as well.
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How much buying power were you using to get that $500/day?
 
The more data you can access the better.
Understand multiple list and costs/benefits and challenges.
Don't over-leverage as it limits your flexibility and some hedge options.
Single name - single lists can be really problematic from a liquidity standpoint.
Think about the contra side of your trade and what they may be undertaking as hedge - if any.
Watch the trading in the cash closely.

Technology will be costly so capital and scale will be need to be good size.
 
Temujin79 said:
How much buying power were you using to get that $500/day?
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That $500 is one contract. Do the math. If you are trading more contracts, you can make more than that $500 a day easily. Remember, there are losses too. You have to consider that too. Not all trades will work out. This was on NVDA stock only. NVDA is a very volatile stock which can easily move $10 or more in one day.
 
smallfil said:
If you are trying to scalp, you want to be as close to the bid, preferably, a couple of ticks higher, say bid $3. You jump ahead of the market maker in the order queue. If you get filled and the stocks move by a huge amount, chances are good, the stock option is now higher than your entry point, say $4. Now, it is up to you to manage your trade. Set a mental stop on when to get out. Use a trailing mental stop. Option price moves to $5, you could set your stop loss at $4.50 and try and get out near that price. I would give up a few ticks to close it out, even at $4.30 or $4.20. Lock in that profit when you are scalping.
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Hmm. I think these numbers are too high. I was thinking scalping means just a few pennys...
 
earth_imperator said:
Hmm. I think these numbers are too high. I was thinking scalping means just a few pennys...
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If you are trading penny stocks, probably, you would get options for 0.10 a contract or if you were buying those lottery tickets (options way out of the money). Midcap stocks or even large caps would probably, have higher premium amounts. It is still scalping. The only difference is the premiums are higher.
 
smallfil said:
If you are trading penny stocks, probably, you would get options for 0.10 a contract or if you were buying those lottery tickets (options way out of the money). Midcap stocks or even large caps would probably, have higher premium amounts. It is still scalping. The only difference is the premiums are higher.
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It's not the premiums, but the intraday change you mean, ie. you mean a change from $3 to $5 within a day or so. This is IMO very unrealistic.
 
earth_imperator said:
It's not the premiums, but the intraday change you mean, ie. you mean a change from $3 to $5 within a day or so. This is IMO very unrealistic.
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No, it is not. Depends on the stock. Highly volatile stocks like NVDA can have $7-$10 point swings during the same day from the lows to the highs. Prices move the entire day. There was one day I remember where I got $500, got in the same day and got another $300. That is in NVDA. Now, that does not happen everyday but, the wild swings happen for volatile stocks almost daily.
 
smallfil said:
No, it is not. Depends on the stock. Highly volatile stocks like NVDA can have $7-$10 point swings during the same day from the lows to the highs. Prices move the entire day. There was one day I remember where I got $500, got in the same day and got another $300. That is in NVDA. Now, that does not happen everyday but, the wild swings happen for volatile stocks almost daily.
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I was talking of the option premium, not the stock price.
 
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