Playing the after hours market with expiring options
- Thread starter FSU
- Start date
Sorry I meant play not trade as per the thread title. You mentioned your broker cutoff time was 5:15 which is much better than a retail broker such as IB’s cutoff time. So I’m really looking for a retail broker with smaller account minimums (even if it’s $25k) with a better cutoff time. TD is out as I’m in Australia
I like the strategy, on Fridays I like to play with options expiring at the end of the day. But I usually closing out by the end of the day or execute stock shortly after the market close. Never thought about playing deep into the after our session.
Doesn't have to be MM's. Could be another trader just trying to close out a useless option for some reason.
To update, Friday Tsla 799.50 about 1 min before the close. Bought the expiring 800 calls for .15. Tsla closed at 800.03. Sold short stock after the close at 800.35 bought back at 799.50, then added a few more scalps. Had to leave at 430et, so I then filed a "do not exercise" on my calls as they were .03 in the money and finished with no position.
I think there is an additional risk here, if for some reason there is a mistake in filing the "do not exercise" I would end up coming in with 1000 shares. I did go over it 10x but there is always that risk.
I think there is an additional risk here, if for some reason there is a mistake in filing the "do not exercise" I would end up coming in with 1000 shares. I did go over it 10x but there is always that risk.
Then this strategy would quickly stop working if a few traders buy all such available options.
But usually MMs must post bid/ask quotes at all times and I usually see very large bid & ask qty/size with price that is continually adjusted (on liquid underlyings), which are clearly not retail traders. I just didn’t monitor them near the close.
Anyway, my question was theoretical to see if someone may have ideas how MMs may deal with such risk on their end.
They quote huge spreads for options close to expiry. Don't think of a single or 2 option affecting them. Their whole book is more or less delta neutral by the end of the day so 1 or 2 small hits will not affect them.