Did i get scammed?

S

stock_trad3r

I placed a debit spread on twitter and realized that there is no way for me to make money on this trade yet they allowed it to be executed anyway


Filled Buy to Open 20 TWTR JAN 3 2014 68.0 Call Net Debit 6.70 -- -- 15:07:58 12/26/13


Filled Sell to Open 20 TWTR JAN 3 2014 68.5 Call Net Debit 6.14 -- -- 15:07:58 12/26/13

I manged to lose $1000 on it on the bid/ask spreads alone


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ANYTIME you try and leg into a spread you risk slippage...esp when a stock has the vol of TWTR. Of course they will allow each leg to get filled, YOU are responsible for your bets.
 
market orders run this risk especially in fast moving names.

if you had called your broker right after the execution you would have gotten some consideration because they traded at the exact same time.
 
If I read that correct...

you spend 56c to buy a spread that at most would be worth 50c. (??)
Expiry is Jan 3 2014
I assume you were buying back a spread that you were short.

If this is the case...the best thing to do in these cases is know what it costs to unwind the spread in brokerage costs.
then......
Compare this to what would happen if both legs which are in the money were to be exercised.

Then you can know your worst case scenarios (the exercises)

and its likely that if you wished to simply try and unwind by buying back the spread at 50c, someone might have the other side they also wish to unwind.
You should be able to advertise this as a spread , and not as mentioned above, have to leg it on.
 
Always enter spreads as a spread order. Don't leg in. Never use market orders unless you like taking it up the butt.

When you pull up the bid/ask for the spread, place a limit order somewhere in the middle. If you're lucky you could get filled halfway between.

Generally you'll get more reliable fills if you split the bid/ask spread in thirds. If the spread is a net debit, set a limit at the price that's the 1/3 nearest the ask. Use the 1/3 nearest the bid for a net credit. Can you do better? Sure, but at least you're getting a fairer price that a market entry. Don't try to outsmart the market makers because you'll just end up giving away money to them.
 
Quote from stock_trad3r:
----debit spread....
----twitter....
----no way for me to make money on this trade....
----executed anyway....
----lose $1000....
----bid/ask spreads....
More...
1) You're in the "10,000 Club"? :confused: :eek:
2) Theoretically, you could make money on that spread if the implied volatilities were to get "weirder" or if you could leg out advantageously. :cool:
 
I know I had 4 contracts of a 68.5 and 68 covered call and then through some trades I got rid of them but the details are vague because I made so many trades yesterday. Assuming the stock closes at 68.5 I should only have a loss of $120 on this spread I hope. I'm having an account rep look into it. Legging out of the position would give me a loss of ~ 500-600 atm

My mistake was placing a spread in such an illiquid market..i was too hasty and should have been more careful
 
Quote from stock_trad3r:

I know I had 4 contracts of a 68.5 and 68 covered call and then through some trades I got rid of them but the details are vague because I made so many trades yesterday. Assuming the stock closes at 68.5 I should only have a loss of $120 on this spread I hope. I'm having an account rep look into it. Legging out of the position would give me a loss of ~ 500-600 atm

My mistake was placing a spread in such an illiquid market..i was too hasty and should have been more careful
More...

Your only mistake is the details being vague. Everything else is a consequence.
 
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