Having market open for 7 days a week would reduce the weekend volatility just from Friday to Monday just because the market doesn't have the opportunity to digest and react to the news that came out during the weekends and then you see a huge gap up/down on Monday from Friday's prices. If the market is open 7 days a week, you would see a lot smoother continuous price movement and it would improve the stability of the market a great deal. I wouldn't mind trading 7 days a week, although 24/7 might be a bit too challenging, 8/7 or 12/7 would be fine.
Future of Options?
- Thread starter .sigma
- Start date
Having market open for 7 days a week would reduce the weekend volatility just from Friday to Monday just because the market doesn't have the opportunity to digest and react to the news that came out during the weekends and then you see a huge gap up/down on Monday from Friday's prices. If the market is open 7 days a week, you would see a lot smoother continuous price movement and it would improve the stability of the market a great deal. I wouldn't mind trading 7 days a week, although 24/7 might be a bit too challenging, 8/7 or 12/7 would be fine.
Or... factional will become THE NORM. Not just fractional quantities in both stocks and options but also allow quotation of arbitrary strikes instead of today's preset values. Had a thread a while ago where a stock capitalized at $50B (so not really penny) was trading at $6, while option strikes only were listed for $5 and $7, making options trading practically impossible.
For such use cases, when stock trades at $5.98 one could see options quoted at a strike of $5.98 : this would be really useful, not so sure why there's no such thing yet.
And also fractional options: right now 1 option contract on SPX involves a notional value of $375,000. I'd like to be able to trade just 1/100th of that, I mean it's still $3,750 of value there.
There is a series of options that is tied to one tenth of the value of SPX, and I am not referring to SPY.
XSP is the symbol for the S&P 500 Mini-SPX options. Not sure how much volume there is, or whether they are really tradable...
BMK
I already know that but thanks for pointing out anyway. It's still too expensive for "Robinhood-sized" accounts - these guys have an average of $2k-$3k of capital it seems.
And I think it's a highly artificial problem, caused by technical inability to solve a simple problem: how to quote options regardless of the price level.
So you have two stocks, one priced at $400 (SPY or XSP) and another at $4 (SMFG - Sumitomo Mitsui Financial Group). Same volatility, say 20%, same maturity say 1 month. Assuming you *can* quote an at-the-money option on both (and because technical stupidity you can't in SMFG case), you still have one option that's 100x more expensive than the other! The way I see it traders should be able to think / invest in terms of "amount of capital" and not "absolute price". So I have $1000 bucks, should be completely transparent from a technical point of view if I invest them on SPY on SMFG. But stupid people incapable of solving technical problems result in us having to deal with the "bugs" essentially and be tied to price levels when we trade.
great point!
Any trader from any country will be able to trade globally, not constrained to just their nations markets.
I hope so too, but seeing the way humanity is currently still in this massive growth/uptrend ever since around 1700ish, the curve is LOGARITHMIC to say the least.
another poster mentioned how he doesn’t think computing power affects financial markets.
think of computing power like the hand of god (godspeed) and the quicker the speed of god the more $ you make over your counter party.
Rationally, same should hapen with equities then, at the same time.
24/7 = Vol could become more spread, i.e. wouldn't have to be so focused into a single day.
Would be easier to hide activity.
But then, what about the illusionary image of brokers still standing at the floor, wouldn't that have slight impact for some Joe in Texas.
,,You gonna tell me that they are still tradin at 2AM in tuesday ?"
Noneless, would attract more retailers, since casinos works 24/7 so why isn't the same with market.
Specially wbets gang.
P.s updated avatar of bucket version looks more classic then blue eyed xman
24/7 = Vol could become more spread, i.e. wouldn't have to be so focused into a single day.
Would be easier to hide activity.
But then, what about the illusionary image of brokers still standing at the floor, wouldn't that have slight impact for some Joe in Texas.
,,You gonna tell me that they are still tradin at 2AM in tuesday ?"
Noneless, would attract more retailers, since casinos works 24/7 so why isn't the same with market.
Specially wbets gang.
P.s updated avatar of bucket version looks more classic then blue eyed xman
Mathematically, what you are saying makes sense. But I don't see how it would work in practice. I think it is more than a "technical" problem.
So you want to buy a Feb. 12 put on 35 shares of SPY with a strike price of 303.46?
Who is going to take the other side of that contract?
A market maker?
There would still be very large premiums, i.e., very wide bid/ask spread, to compensate for the lack of liquidity, i.e., how is the market maker ever going to find someone else to take the contract when they need to close the position?
Maybe what you are thinking is that the exchange could somehow bundle odd-lot options together into standardized contracts so they would have some real liquidity. That could conceivably work for odd numbers of shares. But it doesn't address the customized strike prices you are talking about.
Large institutional investors can sometimes trade "exotic" options that are customized to their specific needs, because they can find another institution that is willing to be the counterparty. But I don't see how this would ever work for retail customers.
If the contracts are not standardized, no one will ever enter a position, because they will be afraid that they will never be able to exit the position. This is not just a technical problem. It's something else...
BMK