I was wondering if anyone prefers to implement options strategies on stocks over 50 dollars per share, and if so, why, that supposing that there might be some advantages. Especially on ones that trade in 5 dollar increments instead of 1, it might be worth considering?
Options trading on stocks over 50 dollars
- Thread starter eaglefeather
- Start date
Robert Morse
Sponsor
What would that advantage stem from?
Sorry if I mis-conveyed my message, but I am fishing for that.
Options with around a $2 price are my nominal favorites.
Potentially just a 0.5% spread and definitely small units.
Potentially just a 0.5% spread and definitely small units.
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All things being equal (all option pricing variables are in the same relationship) then there's no significant advantage in a higher priced stock over a lower one other than possible % B/A spread differences and commissions. Premium is linear and the return will be dependent on your picker.
I definitely prefer higher priced stocks for selling premium. I've been carrying a position in Ford for a few years. I should have sold it for slightly above break even when I had the opportunity. Waiting to see how they benefit from higher oil prices. If you get stuck with F, SYMC, SLV, or HPQ, it's really hard to hedge by selling calls unless you're right ATM and go about a month out. Weeklies aren't really worth it on lower-priced stocks. Also, the commission for 10 calls on a $10 stock is much greater than 1 call on a $100 stock.