Daytrading options

E

earth_imperator

I'm currently studying on daytrading options using just level-1 data (ie. top-of-the book quotes only).
Can it be done with Level-1 data only, or should one do it with Level-2 ? (I even don't know yet whether there is any L2 for options).
I wanted to keep it simple, and do it just for gaining some experience in the fields of daytrading and booktrading.
Of course will do it using auto-trading (ie. program trading, API trading) .
Any tips on strategy etc?

Update: my broker / data provider has only snapshot level-1 option chains data, so L2 is out of view, out of reach.
 
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If I was day trading options, I would be scalping. Far easier to buy and sell options during the day. Call it a day when you have profits in hand. I scalped NVDA maybe, 20-30 times. Do not remember the exact number. I would sell each time I had $500. That was the dumbest thing I ever did as a trader. Here I was taking these minuscule gains when letting NVDA trend and riding it, I would have made $5,000-$7,000 in profits each of those times, or close to it. One big problem being an options buyer is the profits can vanish just as quick. Tighter stop losses might avoid most of the slippage. Oh well, we cannot have everything we want. We need to pick our poison at some point.
 
Robert Morse said:
Yes, of course you can. On Lightspeed trader, option data is an additional $10/Month. If you choose to not look at the 16 option exchanges, you can just lift the window and not look at it. Maximizing Lightspeed Trader for options - https://lightspeed.com/webinar/webinar-on-demand/maximizing-lightspeed-trader-for-options
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Thanks, the video is informative, and your platform (LightSpeed Trader) looks good.
But I need to do it via auto-trading (via API), even unattended, that's even w/o any GUI, on a remote Linux VPS.
 
smallfil said:
If I was day trading options, I would be scalping. Far easier to buy and sell options during the day. Call it a day when you have profits in hand. I scalped NVDA maybe, 20-30 times. Do not remember the exact number. I would sell each time I had $500. That was the dumbest thing I ever did as a trader. Here I was taking these minuscule gains when letting NVDA trend and riding it, I would have made $5,000-$7,000 in profits each of those times, or close to it. One big problem being an options buyer is the profits can vanish just as quick. Tighter stop losses might avoid most of the slippage. Oh well, we cannot have everything we want. We need to pick our poison at some point.
More...
Are you saying you made $5k to $7k a day? How much Buying Power did you have? Have you since then found a better method?

NVDA is a very liquid title, so the B/A spread is very tight I think.
I rather was thinking trading those options with big B/A spreads, but that have a certain avg daily volume.
I wanted to just "jump inbetween". As said just an early idea, nothing real yet.
I have collected some options data over the past months, I'll compile an example of it for posting it soon, to make my above said point/idea clear.
 
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earth_imperator said:
Are you saying you made $5k to $7k a day? How much Buying Power did you have? Have you since then found a better method?
More...

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.
 
We offer EZE EMS that offers that option for trading Equites, options and futures. It is more expensive than Lightspeed and costs $450/month plus market data. Email me directly for more information on EZE EMS-formally Realtick.

earth_imperator said:
Thanks, the video is informative, and your platform (LightSpeed Trader) looks good.
But I need to do it via auto-trading (via API), even unattended, that's even w/o any GUI, on a remote Linux VPS.
More...
 
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.
More...
Thx, I see. So, now your exit rule will be changed from "Profit >= $500" to a something better method.
Yeah, slippage is a problem also here. Just calc the MidPrice, and then set this in relation to the Bid or Ask (depending on Buy or Sell), and see how far off in percent the MidPrice is from the actual Bid or Ask.
I know slippage means the difference between current price and the filled price when using market order.
I try to never use market orders by instead using limit orders. But then too a slippage occurs, since mostly one gets a fill at a worser price than was initially anticipated (ie. the MidPrice).
The above said of mine is of course for normal swing trading. For daytrading I would not use the MidPrice...
 
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earth_imperator said:
Thx, I see. So, now your exit rule will be changed from "Profit >= $500" to a something better method.
Yeah, slippage is a problem also here. Just calc the MidPrice, and then set this in relation to the Bid or Ask (depending on Buy or Sell), and see how far off in percent the MidPrice is from the actual Bid or Ask.
I know slippage means the difference between current price and the filled price when using market order.
I try to never use market orders by instead using limit orders. But then too a slippage occurs, since mostly one gets a fill at a worser price than was initially anticipated (ie. the MidPrice).
The above said of mine is of course for normal swing trading. For daytrading I would not use the MidPrice...
More...

You have to deal with the greedy market makers too. They will squeeze you every step of the way and keep the bid and ask as wide as possible. I understand that is how they make their living but, we have control over when we enter and exit a trade. If the market maker is low balling you for instance, wait till the next day to exit your trade. Chances are good, the market maker is now selling those same options for higher prices as the market maker is now on the ask side of the trade. Now, you can exit at favorable prices.
 
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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