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Options with high liquidity and small spread
- Thread starter ivanbaj
- Start date
Quote from lindq:
How do you figure that? The spreads are insane.
The OP asked for something with small spreads. Index options are definitely not that animal.
The SPY and the Q's are not indexes they're ETF's and the options markets in the front month are a penny or 2 wide except the really deep stuff.
Quote from MTE:
1 penny wide spreads are insane!? what planet are you from?
I am monitoring OTM - ROQOX put on the SPY. The spread is 5 pennies.
The move today that I can expect to catch was about 10 pennies. The spread is 50% or at the best 25%.
ATM - ROQOZ spread about 5 pennies the move today about 30. The spread 30% to 15 %.
the ITM - ROQOC the spread is 10 pennies. the move today was about 100 pennies.
the spread could have been 20% of that. at the best 10%.
Looks like about 20% of the daily move I can catch will be paid to the spread. Tough.
Am I reading this right? Will stock options be any better?
Quote from StockApprentice:
With all respect if you don't know the answer to those questions you're gonna quickly have your money removed from you. There's a LOT to learn. Read historical forums here as much as possible.
Most of your active stocks have decent options. Dow 30 for example. Also consider ETF options: SPY, QQQQ, IWM, DIA, etc.
NDX has decent & liquid options if you want a larger leveraged instrument so you can reduce your # of contracts and thus commissions.
Thanks for the help. I know I sound like a dope. I am looking at your suggestions.
Quote from ivanbaj:
I am monitoring OTM - ROQOX put on the SPY. The spread is 5 pennies.
The move today that I can expect to catch was about 10 pennies. The spread is 50% or at the best 25%.
ATM - ROQOZ spread about 5 pennies the move today about 30. The spread 30% to 15 %.
the ITM - ROQOC the spread is 10 pennies. the move today was about 100 pennies.
the spread could have been 20% of that. at the best 10%.
Looks like about 20% of the daily move I can catch will be paid to the spread. Tough.
Am I reading this right? Will stock options be any better?
You are looking at quarterlys, look at the standard ones for April.
One common mistake I see is people thinking that they are better off trading alot of spy vs a small amount of SPX. If the spy is .04 wide (about normal) and you plan on doing 100 contracts, you are giving up .02 on the trade vs your theo. So you are giving up 100*.02=200 Plus you are paying out alot of commission (if you are paying about 1.00 thats 100.00. You start out down 300. If you do spx that is usually .40 wide, you only have to do 10 for the same revenue. So you are giving up .20*10=200 BUT its only 10 contracts so you would save 90.00 in commission. Something to think about.
Mark
www.option911.com
Mark
www.option911.com
Mark,
How about adopting a different signature?
Maybe use your last initial, or maybe 'Mark 911'?
Thank you,
Mark
Quote from option911:
One common mistake I see is people thinking that they are better off trading alot of spy vs a small amount of SPX. If the spy is .04 wide (about normal) and you plan on doing 100 contracts, you are giving up .02 on the trade vs your theo. So you are giving up 100*.02=200 Plus you are paying out alot of commission (if you are paying about 1.00 thats 100.00. You start out down 300. If you do spx that is usually .40 wide, you only have to do 10 for the same revenue. So you are giving up .20*10=200 BUT its only 10 contracts so you would save 90.00 in commission. Something to think about.
Mark
www.option911.com
Are you referring to SPX futures or options?
I am trying to explore the possibilities of trading long options to avoid a possible disaster if the worst case scenario happens.
I want to explore if it is feasible to trade options instead of futures for short term.
For example if you buy 1 ES contract at 800 and it drops to 660 and you can't get out you will be down $7000
The idea is to trade long options for let's say $2500 this will be the maximum possible loss.
The goal is to maintain the possible profit amount. If ES moves 10 points or $500, I am trying to see if the $2500 worth of options will move $500 or close to it. Also I am considering the slippage.
The option of using the underlying and using options as insurance is not looking good. The cost is to high.
Am I over protecting. How possible it is to go down 140 point on the ES and not being able to get out if you have a market order stop placed at -10 point or so?
Quote from ivanbaj:
I guess I was looking the ones expiring tomorrow
I posted about those "quarterly" options here:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=158918
They are VERY expensive, I don't think they serve any purpose for the retail trader.
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