Noticed bid/ask spreads very wide currently in the options market - curious why?

[destriero]

I opened up an AAPL option chain on TOS and noticed bid-ask spreads quite wide for atm or near the money options, when comparing to before (note I haven't traded options for a while, mainly e-mini micros now). I looked at a few options like AAPL and TSLA, but curious as to whether this is normal due to increased volatility or bc we are at ATH's in the market, etc?

Any input on why the increased spread?

Thx.

XMAS week, Bro. My var was $50K/minute on 30K index vega (today). Buy a calendar.

 

[verial]

It's like this every year before the xmas vacation.

 

[destriero]

XMAS week, Bro. My var was $50K/minute on 30K index vega (today). Buy a calendar.

And by calendar I am referring to a paper calendar. Preferably with kitten pics.

 

[Overnight]

And by calendar I am referring to a paper calendar. Preferably with kitten pics.

I have a good source of pics for that paper calendar. After-dark edition.

 

[The_Krakenite]

A stock that goes up 3 or 4 dollars has increased volatility and increased options prices.

That statement isn't quite correct, in many cases you will see volatility go down with a 3 or 4 dollar tick.

"Low volatility is when the stock is trading within narrow ranges and the bid and asked prices are very close."

We can also argue this one too, with countless counter-examples.

 

[777]

I opened up an AAPL option chain on TOS and noticed bid-ask spreads quite wide for atm or near the money options, when comparing to before (note I haven't traded options for a while, mainly e-mini micros now). I looked at a few options like AAPL and TSLA, but curious as to whether this is normal due to increased volatility or bc we are at ATH's in the market, etc?

Any input on why the increased spread?

Thx.

The reoccurring bid/ask spread is one key reason mom and pop retail options traders get destroyed, regardless of what magic system promising and edge they have brought.

 

[Jones75]

I learned my lesson a long time ago, never engage in long options unless they're heavily traded, have a reasonable tight bid ask spread and the VIX is in favorable territory.

 

[smallfil]

That statement isn't quite correct, in many cases you will see volatility go down with a 3 or 4 dollar tick.




We can also argue this one too, with countless counter-examples.

At the end of the day, what matters is what you pay for the option. That is why measures of volatility are useless and why I define volatility based on how wide the bid and asked spread is. I look for narrow spreads, the narrower the better. Why would any trader want to buy options when the bid and asked spread is as wide as the Grand Canyon? Market makers just taking you to the woodshed for a beating.