Hello,
I am interested mainly in long-term options investing (through LEAPs) and I am afraid that it may only be implemented with relatively small amounts of money (such as 100K) and not with respect to larger amounts (such as 1 million portfolio or even more than that).
I suspect that when an order is submitted for a large quantity (say, 5000 contracts) if it could be filled at all (so there is enough liquidity) the market-makers will change the price substantially in the opposite direction (that is, increasing the price when I try to establish long positions and decreasing the price when I try to establish short positions). I assume they can do it and still keep the synthetic relationships since they just can increase or decrease the implied volatility that is embedded into the different strikes.
Basically, I would like to understand if the increase of the sums involved may in itself turn the option investing through LEAPs to a strategy which cannot be implemented successfully. Also, I wonder if there may be a difference in this regard when using single orders (such as long call) versus spread orders (such as short vertical put). Thanks!
I am interested mainly in long-term options investing (through LEAPs) and I am afraid that it may only be implemented with relatively small amounts of money (such as 100K) and not with respect to larger amounts (such as 1 million portfolio or even more than that).
I suspect that when an order is submitted for a large quantity (say, 5000 contracts) if it could be filled at all (so there is enough liquidity) the market-makers will change the price substantially in the opposite direction (that is, increasing the price when I try to establish long positions and decreasing the price when I try to establish short positions). I assume they can do it and still keep the synthetic relationships since they just can increase or decrease the implied volatility that is embedded into the different strikes.
Basically, I would like to understand if the increase of the sums involved may in itself turn the option investing through LEAPs to a strategy which cannot be implemented successfully. Also, I wonder if there may be a difference in this regard when using single orders (such as long call) versus spread orders (such as short vertical put). Thanks!
