ITM or OTM Calls?

[Real Money]

Then trade the put spread..Read up on Box arbitrage..

Hey, got a question for you. Lets say I want to go synthetic long the index and then maybe let it swing overnight. Is there gonna be a problem with liquidity on the ITM calls when they get deep in the money?

Example
Long SPX call and short SPX, same strike, same expiry (weekly).

 

[taowave]

Hi there,havent traded SPX in a while,so I am not sure of the bid offer spread.Why wouldn't you trade the future instead,or trade the ATM synthetic?

In your example,it looks like you left out "put", as in short put...

Hey, got a question for you. Lets say I want to go synthetic long the index and then maybe let it swing overnight. Is there gonna be a problem with liquidity on the ITM calls when they get deep in the money?

Example
Long SPX call and short SPX, same strike, same expiry (weekly).

 

[Real Money]

Yea, I mean't (ATM) synthetic long SPX using index options instead of futures. I've just heard that omm don't like deep ITM calls (somebody on here said so). The guy said something like

"it trades like a future and mm don't like to trade it unless they are getting edge..."

I can't think of a reason to trade the synth long index as opposed to the futures, but just looking for more info in this.

Synthetics seem like an interesting thing to me for index trading, but don't know much about how useful they might be.

 

[Trade Theory]

An ATM debit spread is the best IMO if you plan to hold the trade close to expiration. If you want to be able to exit any time look for an ITM single option around 85 delta to get the most bang for your buck.