OEX vs SPX vs NDX ... Likes / Dislikes about each index for your trading style

B

birdman

Which index do you prefer to trade options on and why? Don't forget to mention if you day or swing trade?

What are the key characteristics to remember about each index?

Thanks for your participation:)
 
Quote from birdman:

Which index do you prefer to trade options on and why? Don't forget to mention if you day or swing trade?

What are the key characteristics to remember about each index?

Thanks for your participation:)
More...

Why don't you start it off... ?
 
The OEX's are too big in size for me, so I like the Q's more. However, they aren't as sychronized to the Dow as the DJX's or options on the DIA's. But Dow options have a wider spread. So I start to pull my hair out trying to figure out how much that wider spread is worth.
 
I have the exact same problem and here is my breakdown/justification for the DJX ATM Leaps options spread:

0.5 = 0.2*2 + 0.1

(0.2 is the spread observed on QQQ ATM LEAPS )
2 fpr the price level is almost twice that of the QQQ
0.1 premium for 60/40 tax rule,liquidity and more wider swings of DJX.

is my observation correct??
 
Thanks for your insight and you may be correct (except for liquidity as the Q's are often the most liquid option out there), but I think the DJX spread has more to do with them only trading in Chicago. Which makes me wonder if the DIA's are a better instrument, albeit they are probably not 60/40. BTW, has that been definitively determined yet?
 
I usually trade the OEX options as well as the Q's occasionally. Yes the spread on OEX is horrible but if you trade a series with good liquidity you can get between it. I mainly daytrade this index unless there is a continuing trend as there is now. The main problem is of course CBOE. Place an order and it takes a bit of time while the boys look it over and decide whether to display it or take it. All the while, the market is moving of course. If your order is executed it takes longer than it should to get the notification. Once in a while, as happened to me today, they will just trade right through your order as though it isn't there.

On the other hand it's easy to hedge with futures or different series. I always try to stay away from options trading below $3.

I use SPX as an entry/exit trigger.
 
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