I'm still leaning on the assumption though, that the majority of traders aren't willing to do what it takes to get familiar with options. Your last statement was the qualifier. "IF you're good at trading options."
Penny incements for options ?
- Thread starter IV_Trader
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I'm still leaning on the assumption though, that the majority of traders aren't willing to do what it takes to get familiar with options. Your last statement was the qualifier. "IF you're good at trading options."
Fooey. It's just not necessary to dedicate any time learning the multitude of intracacies of options trading. It's much better to go on instinct IMO.
Why waste your time when when one can just leverage any of the hundreds of auto-trading options advisories out there? Guaranteed $$$ for doing virtually nought. It's a no brainer. Outsource your thinking to someone else for a small monthly fee. It makes economic sense and you can just sit on a beach sipping Margaritas.
Even if you aren't willing to outlay the small monthly fee you can always use very high probability strategies that have been discussed in detail here on ET....all without really needing to know a) how and when an option is settled b) what it is settled to c) any of the greeks d) how to determine position size e) how to manage your risk and exposure etc.
I outlined on another thread a strategy that allowed me to quadruple my money in three months based on the ground-breaking WTF(TM) chart study. You can trade it mechanically without really knowing a thing about options! (you need to know a little about statistics though and have an E-Signal subscription)
As such, I have to respectfully disagree with your assertion. Each to his own.
Prosperous trading.
MoMoney.
LMAO, thanks for re-directing me to that wonderful strategy Mo. I've not kept up with any threads lately and that one was good for a laugh.
Hey, I'd appreciate it if you'd continue with your slightly indescernable sarcasm concerning the value of advisories. You know, just in case I fall into hard times and need to start one to make ends meet.
Think about it though, why would you lay out the higher capital requirement for any stock that doesn't pay a dividend whey you will be able to participate more closely to that stock's movements with tighter spreads in options?
If you are trading a stock regularly and "know" it pretty well and have done well trading it, why would you mess with the stock if the option spreads tighten. Stocks will once again be vehicles for longer term investments and dividend accumulation. Why on earth would anyone buy CSCO when you could just slip in and out of it on the options side with tighter spreads.
If you are a chart trader and are trading things like breakouts or reversals, I don't know why one would mess with the actual stock when you could trade the options with tighter spreads. Also with the advent of all these ETF's, their options should flourish with tighter spreads.
I guess it was destined to happen with all the competition between the exchanges. Options are one of the fastest growing areas in trading volumes and fees. Now that the exchanges are for profit, there's nothing but more pressure to compete and competition is always good for the consumer/end user.
As far as being good at trading options, that's an individual thing and if you're not good, the markets will see to you and your capital no matter what you're trading. Only the smart and strong survive. Strength is starting to be superceded by smarts with the dropping fees environment.
If you are trading a stock regularly and "know" it pretty well and have done well trading it, why would you mess with the stock if the option spreads tighten. Stocks will once again be vehicles for longer term investments and dividend accumulation. Why on earth would anyone buy CSCO when you could just slip in and out of it on the options side with tighter spreads.
If you are a chart trader and are trading things like breakouts or reversals, I don't know why one would mess with the actual stock when you could trade the options with tighter spreads. Also with the advent of all these ETF's, their options should flourish with tighter spreads.
I guess it was destined to happen with all the competition between the exchanges. Options are one of the fastest growing areas in trading volumes and fees. Now that the exchanges are for profit, there's nothing but more pressure to compete and competition is always good for the consumer/end user.
As far as being good at trading options, that's an individual thing and if you're not good, the markets will see to you and your capital no matter what you're trading. Only the smart and strong survive. Strength is starting to be superceded by smarts with the dropping fees environment.
I think it's an encouraging step in the right direction, and b/o spreads will improve. This makes me very happy. Exchanges and brokerages charging cancellation fees will still discourage spreads from narrowing, as retail traders are always going to be reluctant to provide liquidity if they pay a cancellation fee to move their limit orders around. Now if IB were to drop their cancellation fees, I'd be much more excited about this.
I agree with you in the sense that I would rather trade the options instead of the underlying. But...
If many people adopted the same mentality they would have to LEARN options. Better spreads isn't the only thing that makes trading the underlying easier. When people trade options (even ITM) as proxies for the underlying they now have gamma, vega, and theta risk that is not associated with trading the underlying.
My opinion, as I've attempted to teach many people to trade options, is that most people aren't suited for options trading. It might be their personality, their work ethic, or their mathematical aptitude. I'll be the first to admit, options strategies are more difficult. I personally think that the versatility makes up for it though.
