How to reduce the bid/ask spread

M

mastlarka

I am new to buying & selling options. On most of the options, the bid/ask spread can be quite wide. So, I tried to enter a limit order that was close to the price in the middle and in all of my last 4 trades it did get executed within seconds.

For example, if the bid is $1.25 and the ask is $1.35, try entering a limit order for $1.30, chances are it will be filled almost right away.

Hope this helps some of the folks who only enter market orders. Feel free to share your experience and tips.
 
Quote from mastlarka:

I am new to buying & selling options. On most of the options, the bid/ask spread can be quite wide. So, I tried to enter a limit order that was close to the price in the middle and in all of my last 4 trades it did get executed within seconds.

For example, if the bid is $1.25 and the ask is $1.35, try entering a limit order for $1.30, chances are it will be filled almost right away.

Hope this helps some of the folks who only enter market orders. Feel free to share your experience and tips.
More...

1. don't trade options that are available through only one exchange.

2. if you are trading spreads, find a broker who would fill your multi-leg strategies individually.
 
Speaking of splitting the bid/ask, cool new feature coming to TOS in the next week or two. You can set a stop based on the underlying price which when activated will submit an option order at the mid price at that time. Are any other brokerages providing this sort of order type?
 
TD Ameritrade has triggers that you can setup to execute a trade or send you an email based on a specific criteria. I use them all the time, to limit my losses on naked calls.

Quote from ajna:

Speaking of splitting the bid/ask, cool new feature coming to TOS in the next week or two. You can set a stop based on the underlying price which when activated will submit an option order at the mid price at that time. Are any other brokerages providing this sort of order type?
More...
 
Quote from mastlarka:

I am new to buying & selling options. On most of the options, the bid/ask spread can be quite wide. So, I tried to enter a limit order that was close to the price in the middle and in all of my last 4 trades it did get executed within seconds.

For example, if the bid is $1.25 and the ask is $1.35, try entering a limit order for $1.30, chances are it will be filled almost right away.

More...

I do option spreads.

Option trading is not day trading. Who cares how fast you get filled.


Depending on the market, I place my initial order at 1.20 and let the market come to me. It is not uncommon that I get filled immediately.

With a 10 cent spread, I would not go more than a couple pennies.
 
I have done this exact play many times (bidding in the middle of spread) and not been filled for days or at all.

But someone else here said who cares, let the market come to you. I agree with that too. When I chase the market, I loose.


Quote from mastlarka:

I am new to buying & selling options. On most of the options, the bid/ask spread can be quite wide. So, I tried to enter a limit order that was close to the price in the middle and in all of my last 4 trades it did get executed within seconds.

For example, if the bid is $1.25 and the ask is $1.35, try entering a limit order for $1.30, chances are it will be filled almost right away.

Hope this helps some of the folks who only enter market orders. Feel free to share your experience and tips.
More...
 
You must log in or register to reply here.
Back
Top