I do have a book but not surprisingly its largely theoretical, hence why I'm asking how its done in reality
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Does anyone trade options via spread betting firms?
- Thread starter nxt7
- Start date
I do have a book but not surprisingly its largely theoretical, hence why I'm asking how its done in reality
Thank you. I didn't know this. The books/articles I've read don't include this additional step of explanation as they just show the profit received as the premium and the loss as trade size x difference between strike and underlying.your profit or your loss will be the premium received minus what you payed for buying it back ... that can be much more than the premium received ... that's how people go broke selling options if they don't know what they are doing ...
You know it is tough enough to trade, but going to spread betting I think just makes it a tad harder to profit. Put your time into back testing your ideas and trade as everyone else has, the difference is most newbies don't back test well. What newbies often do is buy into a slick presentation of a saleman saying this is new approach to trading the markets and you don't need much money to get into it, you might even win a few times to make you think you can easily do so only to be drawn into over your heads.
Hey, I old a ripe piece of property along the border of Texas/Mexico, ahh the beautiful sunsets, fishing off the banks, don't let the gunfire scare you off, mexs just letting you know it time to go home, don't look at bullet holes in your truck as bad, think of it as ok as you were not in truck as holes were being created.
Hey, I old a ripe piece of property along the border of Texas/Mexico, ahh the beautiful sunsets, fishing off the banks, don't let the gunfire scare you off, mexs just letting you know it time to go home, don't look at bullet holes in your truck as bad, think of it as ok as you were not in truck as holes were being created.
also, do not trade options with sb firms, u will be ripped off due to their insane bid/offer spreads
Yep...you're right. The spreads are indeed insane. OTM, ATM or ITM it doesn't even matter...The high premiums/costs essentially makes strategies like straddles, spreads and strangles completely useless unless you have a like 300-500 point move to profit, which just ain't happening unless its a black swan event.
Can't believe I wasted 3 days on this. I guess I had to see for myself first. Back to the drawing board finding a broker...
You're making it too complex when it's very simple with spread bets.
An option is offered at 25-28.
You buy at 28, £10 a point.
Assume the option goes to zero. Your loss is 28 points x £10 or £280.
Assume the option goes higher and is now priced at 77-81. You sell the bid at 77. Profit is 77-28 x £10 or £490.
As far as the pricing goes, that is obviously determined by the market maker (the spread betting company). You cannot get inside the spread, you can only ever sell the bid or buy the offer. You can work an offer higher than the current price but in order to get filled the option will have to go bid at your price. Vice versa for bidding the market below the current price.
Can one make money with spread bet options? Yes, but it's very hard to do overtime because the spreads are wider than on the actual Exchange. Therefore in my option spread bet options should be played occasionally.
An option is offered at 25-28.
You buy at 28, £10 a point.
Assume the option goes to zero. Your loss is 28 points x £10 or £280.
Assume the option goes higher and is now priced at 77-81. You sell the bid at 77. Profit is 77-28 x £10 or £490.
As far as the pricing goes, that is obviously determined by the market maker (the spread betting company). You cannot get inside the spread, you can only ever sell the bid or buy the offer. You can work an offer higher than the current price but in order to get filled the option will have to go bid at your price. Vice versa for bidding the market below the current price.
Can one make money with spread bet options? Yes, but it's very hard to do overtime because the spreads are wider than on the actual Exchange. Therefore in my option spread bet options should be played occasionally.