executing in extremly illiquid stock options

[delta_1]

A question to the more experienced option traders:

It's mostly not advisable to trade illquid options - I know. Let's leave that general notion aside for a minute.

I am looking at a stock that is in very unique environment:
Conditional on a certain event happening in the coming 1-3 month the stock is likely going to fall > 50% or rise > 100-200%.
I am sure the move is going to be that extreme and I want to bet on the possibility of a rising price.

The problem is the extreme illquidity of the options.

My question is how could I get a position as cheap as possible?

I would go for the strike at $23 by putting in buy orders at $ 0.30 and steadily increasing the price hoping to get a fill < $ 4.70. It's probably unlikely to get a better fill.
(Screenshot is after hours but there is 0 open interest during market hours, too.)

Is there a better way to do it?
Your advice is very much appreciated.

 

[lx008]

to use some trading algo to do it maybe,
so you can keep your bid size small, easier to get better fill.

 

[maxinger]

Let's say you managed to enter at a good price.

Then that is the start of your sleepless night;
You will find difficulty in getting out.

 

[delta_1]

I wouldn't. The deep ITM calls are < than the current price even for the options that expire in two weeks. I do think that will change as huge liquidity should be coming back in the positive scenario. I don't bet on that liquidity.
My plan is to keep the options until they expire in order to get the intrinsic value = the stocks at the current price.
Then I will have made all the money from the upswing and can sell stock or decide to keep it a bit longer.

The upside is more likely than the downside.
In both cases the move will be extreme. In 1-3 month the company is going to be a respectable player again or be real close to bankrupty.

 

[newwurldmn]

A question to the more experienced option traders:

It's mostly not advisable to trade illquid options - I know. Let's leave that general notion aside for a minute.

I am looking at a stock that is in very unique environment:
Conditional on a certain event happening in the coming 1-3 month the stock is likely going to fall > 50% or rise > 100-200%.
I am sure the move is going to be that extreme and I want to bet on the possibility of a rising price.

The problem is the extreme illquidity of the options.

My question is how could I get a position as cheap as possible?

I would go for the strike at $23 by putting in buy orders at $ 0.30 and steadily increasing the price hoping to get a fill < $ 4.70. It's probably unlikely to get a better fill.
(Screenshot is after hours but there is 0 open interest during market hours, too.)

Is there a better way to do it?
Your advice is very much appreciated.

If you share the

A question to the more experienced option traders:

It's mostly not advisable to trade illquid options - I know. Let's leave that general notion aside for a minute.

I am looking at a stock that is in very unique environment:
Conditional on a certain event happening in the coming 1-3 month the stock is likely going to fall > 50% or rise > 100-200%.
I am sure the move is going to be that extreme and I want to bet on the possibility of a rising price.

The problem is the extreme illquidity of the options.

My question is how could I get a position as cheap as possible?

I would go for the strike at $23 by putting in buy orders at $ 0.30 and steadily increasing the price hoping to get a fill < $ 4.70. It's probably unlikely to get a better fill.
(Screenshot is after hours but there is 0 open interest during market hours, too.)

Is there a better way to do it?
Your advice is very much appreciated.

I Sent you a pm

 

[PPC]

The upside is more likely than the downside.
In both cases the move will be extreme. In 1-3 month the company is going to be a respectable player again or be real close to bankrupty.

You don’t know that; you only think that. Subtle, but a huge difference.

Every trade has an uncertain outcome regardless of the strength of your conviction.

Accept that you might have to take the full loss on this gamble.

Regarding the order, submit just a 1 lot limit order in system to see where the fish are biting and to see if it would be still worth your R/R.

Don’t put in the full order size for others to see or they’ll screw you even more. If the fish won’t be biting at reasonable price, then forget about it.

 

[delta_1]

Yes, exactly. I have a big enough position in the stock and I don't want to increase my downside risk any more in case it sharply drops as it would be more than the $5 I'd pay for the option.

Fishing is what I am thinking. Try at mid spread, then a little more and so on.

 

[maxinger]

Yes, exactly. I have a big enough position in the stock and I don't want to increase my downside risk any more in case it sharply drops as it would be more than the $5 I'd pay for the option.

Fishing is what I am thinking. Try at mid spread, then a little more and so on.

I guess you don't intend to close your
a big long position in this unknown stock that has most likely been on a downtrend since months/years ago.

And you wanted to add more positions/strategies in this unknown stock
by trading its illiquid options.


GOOD LUCK!

 

[TrAndy2022]

A question to the more experienced option traders:

It's mostly not advisable to trade illquid options - I know. Let's leave that general notion aside for a minute.

I am looking at a stock that is in very unique environment:
Conditional on a certain event happening in the coming 1-3 month the stock is likely going to fall > 50% or rise > 100-200%.
I am sure the move is going to be that extreme and I want to bet on the possibility of a rising price.

The problem is the extreme illquidity of the options.

My question is how could I get a position as cheap as possible?

I would go for the strike at $23 by putting in buy orders at $ 0.30 and steadily increasing the price hoping to get a fill < $ 4.70. It's probably unlikely to get a better fill.
(Screenshot is after hours but there is 0 open interest during market hours, too.)

Is there a better way to do it?
Your advice is very much appreciated.

Best way I think is to place a limit order in the mid of bid/ask spread of the stock options quoting. There you have a 70% chance that you get filled. I know this from the experience of options market makers, saying you have a 70% chance to get filled in the middle of the spread when having a limit order.

 

[delta_1]

I didn't want to mention the stock because this forum is often times aggressive for no reason. The thread would deviate from the real subject to discussions about how stupid it is to have a certain hypothesis about a stock or any other subject for that matter.

This way we focus the discussion on something that could be helpful to many people:
"What if you think it is highly likely that stock x is going to move way more than we need to pay for the options...How do you go about it?"