How to get options with distant strike?

[VolSkewTrader]

Not sure how they exactly work but try quoting it as a Flex.

http://www.cboe.com/products/flex

Xandman is right that they'll be laughing at the request, unless you come in with a big order (500+ lot). Regardless, the main MMs are going to make you a wide-ass market. And when you show your side (bid), they are going to move their offers and make you pay up to teach you a lesson for not lifting their original offer.

Either way, you are going to have to pay up because the MM's won't have any other place to lay it off.

 

[xandman]

It's fair. But, is it worth the time to tie up the capital that long? Let's say you do 100,000 contracts for a penny. In this theoretically fair world, a guy takes your $1000 dollars where a whopping $590 is all edge. Now he has to cover $300,000 notional risk (depends on his margin/haircut) for your $410 dollar option? Not gonna happen.

Believe me. I thought I could rob you first. And, I mean a "fair" robbery.

 

[FSU]

You could try this: http://www.cboe.com/aboutcboe/new-strike-price-requests

"If you'd like to request new strike prices for an option that trades at Cboe, please call our Strike Price Request line, at 1-877-THE-CBOE, and select choice 4 from the main menu. Please understand that not all requests can be accommodated."

Unfortunately as of June 1 you can no longer request new strikes this way. You must go through your broker and they will contact the CBOE.

https://cdn.cboe.com/resources/release_notes/2020/New-Series-Requests.pdf

 

[thecoder]

I should have done this trade about 4 years ago by investing $10k when AMD was about $2.90.
Just imagine how much I would have made if I had held it till now?
Can anybody calc it?...

 

[xandman]

Unfortunately as of June 1 you can no longer request new strikes this way. You must go through your broker and they will contact the CBOE.

https://cdn.cboe.com/resources/release_notes/2020/New-Series-Requests.pdf

You're one of the more sophisticated operators here. But, I do not see how anybody else can attempt trading strikes outside the average chain much less trade the edges. I know I can't.

 

[xandman]

I should have done this trade about 4 years ago by investing $10k when AMD was about $2.90.
Just imagine how much I would have made if I had held it till now?
Can anybody calc it?...

Don't punish yourself with that thinking. You made a decision back then that was right for you at the time. Question the process, not the result.

 

[thecoder]

A follow-up question:
What happens if your trade counterpart (ie. the option writer) goes bankrupt in the mean time?

 

[thecoder]

Don't punish yourself with that thinking. You made a decision back then that was right for you at the time. Question the process, not the result.

I just try to learn from such a past experience hoping to find another such candidate like AMD.
That strategy would have made in about 4 years more than 300x the initial investment, ie. 10k to 3M.

 

[xandman]

A follow-up question:
What happens if your trade counterpart (ie. the option writer) goes bankrupt in the mean time?

Retail is protected from counter-party issues. Everything is cleared and settled with the exchanges.

 

[thecoder]

Retail is protected from counter-party issues. Everything is cleared and settled with the exchanges.

Oh, good to know. Thx.