Short term options play

[dagnyt]

Quote from forrestang:

Thanks Mark.

I have dispatched an email and will report back what they say. I think they calculate based on bid price?

But I thought we would want P/L to be calculated by the bid? Wouldn't that give us a better estimate of what we'd be able to close the position for?

Also, with the amount of premium, can you expound. Are we better off trying to use 30%, or is a lower number even better?

IV should have less effect the lower the number right?

Unless the bid/ask spread is very narrow, you can almost always get a higher price than the bid price when selling.

Selling at the bid price and buying at the ask price is not the way to make money when trading options.

I did not express (nor do I have) on opinion on how much time premium you want when you buy options. I don't buy options as a directional play, so cannot offer advice (except that it's a very difficult way to make money).

Yes, the less time premium in an option, the less its price changes when IV changes.

Mark