Deep ITM Calls

Crash the Gate said:
Tom,

You've been extremely helpful. Can you go into what you mean by "requests get made?"
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I think if you Google something like "How the CBOE comes to set strikes" or similar, you'll get a whole lot more up-to-date than my little brain, but the CBOE will create an eligible strike-to-trade upon request of any "qualified" party, with a note from Mom. And so you'll see gaps in weird places, simply because nobody requested a strike. But if you're trying to provide a program framework for "all possible strikes" -- you will become *intimately* familiar with the fill-ins over time. UGH. :rolleyes:
 
Another thing is this - look at the Delta. That is the % of move your option will get for every $1 move the underlying makes. Usually you can find an ITM call that is .90 delta or even better without going that far down. But the liquidity and spread can be a big problem when you get too far in the money - making it very hard to get out of a trade.

If that does not work for you, try buying TWO atm the calls (which are always .50) and your delta is be 100, and they are far more likely to move.

Good luck & do more research on the Greeks.
 
crash the gate the strikes you are refering to are 0 delta and way beyond the 0 bid on the out the money version. the price of the itm call is just the distance between the strike and the forward plus twice the bid offer on the forward. as time passes the set of strikes with non zero time value convergest towards spot as they decay. why would you want to trade these anyway?
 
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Check selling deep in the money puts aswell ifyou want to buy and hold stuff so you don't have to worry about premiums or stikes so far away in spot. Anything with a big rr and longer dated ideally so the vega counts. The static carry from the forward is serious money
 
Thanks to all of you for your answers. You've been very helpful. What I'm trying to get a better grasp of is the mechanics of trading as opposed to any specific strategies, at least for the moment. Along that line, I'd like to follow up with a second question.

There are JUN 14 TSLA Puts with a 95 strike showing 0.00 bid and 0.01 ask. There was a trade this past Friday at 3:54 EDT. Why is the bid 0.00? Is it simple rounding--someone sold 100 contracts for say $30 which works out to 0.003 per share? Or is something else going on here?

As a follow-up will a bid price eventually "fall off" due to lack of trading after a certain amount of time?

Again, thank you for helping a newer trader better understand what she is seeing on the screen.
 
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