New guy and the new math ....
- Thread starter wburt1948
- Start date
I'm an Army vet, but spent 20+ years living aboard and cruising (Caribbean, etc.) But yeah, I got away from eTrade as soon as I could; between their fees and the ridiculously clunky interface, it was a real pain. These days, I mostly use TradeStation - which, BTW, has some great discounts for veterans - and TastyWorks.
This is a .20 spread. Run calculations - be honest with yourself - on the percentage of capital that you are giving up on the spread. You always need to assume that you are going to be paying the spread.
New traders often ignore this cost, but it can be very significant once you start to put more capital at risk. It needs to always be part of your plan, and you need to be prepared to overcome it.
Is it difficult? Of course it is. Otherwise we'd all be living on the coast in La Jolla.
Like you mentioned, you would need another platform, you are missing some crucial information. Tradestation good, thinkorswim is also excellent. The spread is in reference to the bid/ask. Just looking at the spread, you would need the price to move a lot just to break even. If IV(implied volatility) is higher than historical, options will be more expensive. The IV will eventually drop to or below historical volatility, causing your options to drop in value, all else being equal.
Already looking at TastyWorks. Glanced at Tradestation. I'll likely have to eliminate some positions on eTrade to fund a new account. Is there an overall consensus on the best product? I'm an active but small dollar amount trader. Retirement hobby.
Thank you your reply and help. It is appreciated.
Thank you your reply and help. It is appreciated.
Open contracts are positions of those with option trades on your stock. Volume is the number of contracts that got bought and sold during that day. Having a larger open interest allows you to get out at better prices.
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Market makers make the most monies when the bid and asked is wide apart as they take both sides of a trade. Say, Bid $2.00 and Asked $5.00. Chances are good you will not have your order filled. Are you going to pay $500 when other buyers are only willing to pay $200? Contrast that with a stock with a Bid of $1.50 and Asked $2.00. You can probably, offer to pay $1.75 and get filled. Now, you did not get hosed. If you overpay, the chances of losing your trade increases since, you are an option buyer.