This thread has drifted off into discussing volume - which, while important, does not deal with your original question. As @destriero pointed out, the reason for the price change is that the implied volatility (which is what "vol" usually means WRT options) dropped.
New guy and the new math ....
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This thread has drifted off into discussing volume - which, while important, does not deal with your original question. As @destriero pointed out, the reason for the price change is that the implied volatility (which is what "vol" usually means WRT options) dropped.
Here's an example of my just poking around. Assuming there is some upward momentum, would this be a reasonable sample of what to look for?
MGM $21 strike Call BID 2.78 x 251 (assuming this is the volume) and ASK 2.98 x 189
Not too wide a spread in Bid/Ask and both volumes are at or near 200.
Thanks again everyone.
MGM $21 strike Call BID 2.78 x 251 (assuming this is the volume) and ASK 2.98 x 189
Not too wide a spread in Bid/Ask and both volumes are at or near 200.
Thanks again everyone.
It’s possible that he simply overpaid, especially on a very wide bid/ask spread. Market makers can ask $0.50 for an option worth $0.05.
Yes, thanks for this.
Preferably trade volume. But they kinda go hand in hand with bid/ask
Looking at his first post, and given the initial premium and the change in the underlying that he described, it doesn't seem like that would be the reason - but this is certainly worth mentioning. A wide B/A spread, especially given lack of volume, is fairly likely.
Things I check before I purchase any options: IV and spreads. Unfortunately, you got whacked by both. Those spreads are nasty and implied is higher than historical volatility at the moment.