I've found on the example of 12.40 - 12.90 that I can usually get filled at 12.75, but not nearly as often at 12.70. Also, like you said, spreads seem to get better fills with less effort. Although I have found it difficult to get mid fills trading SPY options. Not sure why though, cause the volume is so high.
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Should I care how wide Bid/Ask Spread is???
- Thread starter frcrilly
- Start date
I've found on the example of 12.40 - 12.90 that I can usually get filled at 12.75, but not nearly as often at 12.70. Also, like you said, spreads seem to get better fills with less effort. Although I have found it difficult to get mid fills trading SPY options. Not sure why though, cause the volume is so high.
You'll have to experiment a bit to figure out where you can get filled. The following are some generalities:
-Heavily traded options have smaller spreads
-It is easier to get filled at or near the midpoint of a narrow spread than a wide spread
-It will be harder to get midpoint fills on a volatile day
-It will be harder to get midpoint fills late in expiration week
You might do better once or twice by dealing in Fly-By-Night-Biotech, but eventually you may get burned. I like to stick to heavily traded underlyings. There is plenty of money to be made even in boring large caps or ETFs.
OK to take a flyer once in a while on something a little more risky (as I did on FFIV recently--ouch) but make it a rare morsel and not your main course. And please take care to have an exit plan. Good luck.
-Heavily traded options have smaller spreads
-It is easier to get filled at or near the midpoint of a narrow spread than a wide spread
-It will be harder to get midpoint fills on a volatile day
-It will be harder to get midpoint fills late in expiration week
You might do better once or twice by dealing in Fly-By-Night-Biotech, but eventually you may get burned. I like to stick to heavily traded underlyings. There is plenty of money to be made even in boring large caps or ETFs.
OK to take a flyer once in a while on something a little more risky (as I did on FFIV recently--ouch) but make it a rare morsel and not your main course. And please take care to have an exit plan. Good luck.
Quote from surfer25:
I've found on the example of 12.40 - 12.90 that I can usually get filled at 12.75, but not nearly as often at 12.70. Also, like you said, spreads seem to get better fills with less effort. Although I have found it difficult to get mid fills trading SPY options. Not sure why though, cause the volume is so high.
what are you trading in SPY that you have a difficult time to get filled? the markets are tight. when you want in or out of a position is an extra penny really a deal breaker? i'll gladly give up $1k to make $10k, or whatever multiple you may trade in.
Quote from tomk96:
what are you trading in SPY that you have a difficult time to get filled? the markets are tight. when you want in or out of a position is an extra penny really a deal breaker? i'll gladly give up $1k to make $10k, or whatever multiple you may trade in.
No, it is not a big deal. It is super easy to get filled at the price. I am just surprised that it seems so hard to get filled in between the bid and ask on SPY spreads that are tight and where the component legs have very high volume. I was wondering why this is the case.
Quote from drcha:
You'll have to experiment a bit to figure out where you can get filled. The following are some generalities:
-Heavily traded options have smaller spreads
-It is easier to get filled at or near the midpoint of a narrow spread than a wide spread
-It will be harder to get midpoint fills on a volatile day
-It will be harder to get midpoint fills late in expiration week
Thanks, I have found all of this to be true.
Quote from frcrilly:
Hi All,
Stock A Bid 0.89 Ask 0.91 Mark 0.90
Stock B Bid 0.70 Ask 1.10 Mark 0.90
Whenever you trade options, you have to factor in a "spread cost" before deciding whether it is viable or not. For liquid stock/options, the spread is small, so you do not have to get a fantastic opportunity to break-even. For (B) I would say do not trade it unless you feel this is a once-a-week/month/year opportunity, because the cost is real. You might get a fill at 1.00 (forget about mid-point), but plan for 1.10!
Also size matters. Just because a stock option is quoted in pennies (say bid 1.20 ask 1.21, does not mean you will get filled at 1.21 if you are presenting 1000 cars unless the stock itself is very liquid. You can quickly find the ask disappear and the stock along with it. Be prepared to pay a premium commensurate with the size you are trading.
Quote from neke:
Also size matters. Just because a stock option is quoted in pennies (say bid 1.20 ask 1.21, does not mean you will get filled at 1.21 if you are presenting 1000 cars unless the stock itself is very liquid. You can quickly find the ask disappear and the stock along with it. Be prepared to pay a premium commensurate with the size you are trading.
Very true for options, stocks and futures. If the market is quoted at 1.10 bid and ask 1.11 and I wanted to buy at the 1.11 ask, I would place a limit at that price instead of a market order. On a market order, you never really can be sure of the actual price.