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Options with high liquidity and small spread
- Thread starter ivanbaj
- Start date
I was talking about options on the SPX, although as Im sure you know, there are options on the Big Futures (those are 2.5 times the size of the spx contract). Options on the Mini Future (1/2) the size.
I wouldnt suggest the options on the futures though, because it can confuse alot of people, and they are less liquid.
Mark who isnt insecure about being the only Mark
www.option911.com
I wouldnt suggest the options on the futures though, because it can confuse alot of people, and they are less liquid.
Mark who isnt insecure about being the only Mark
www.option911.com
Quote from option911:
I was talking about options on the SPX, although as Im sure you know, there are options on the Big Futures (those are 2.5 times the size of the spx contract). Options on the Mini Future (1/2) the size.
I wouldnt suggest the options on the futures though, because it can confuse alot of people, and they are less liquid.
Mark who isnt insecure about being the only Mark
www.option911.com
Thanks. I got it.
Quote from ivanbaj:
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?
Ivan,
I think there are definate ways to have protected directional option plays. However, I before you do ANYTHING, I would seriously consider doing alot of reading and some research. A good place to start is the CBOE website (look for the options institute). They have free educational stuff, and for the most part arent trying to sell you anything (save Jim Bittman's book-which is actually pretty good). And do plenty of reading, the bible of floor traders is Option Pricing and Volatility by sheldon natenberg, but there are lots of other (cottle for instance). Better to skip trading options for a couple months then blow several thousand dollars learning that you need to learn.
Mark
www.option911.com