Spx getting filled

[Meridaliving32]

Hello all,
Im new to the message board and have questions about trading options on SPX. I recently opened a margin account and have been papertrading for over two years. I consider my style of trading as scalping, im in and out of trades within seconds to a few minutes. I trade daily’s and weeklies. My question is the following, I generally trade between 5 to 10 contracts at a time. I usually never have issues getting filled at the mid when buying and selling during the morning and afternoon. My question to those who trade Spx is should I be concerned being able to get filled and sell 10 contracts at a time in the money? Thank you

 

[ETJ]

Generally no unless there is some disruption in the futures market - which is the common hedge for the options.

 

[Robert Morse]

Hello all,
Im new to the message board and have questions about trading options on SPX. I recently opened a margin account and have been papertrading for over two years. I consider my style of trading as scalping, im in and out of trades within seconds to a few minutes. I trade daily’s and weeklies. My question is the following, I generally trade between 5 to 10 contracts at a time. I usually never have issues getting filled at the mid when buying and selling during the morning and afternoon. My question to those who trade Spx is should I be concerned being able to get filled and sell 10 contracts at a time in the money? Thank you

• You should not have issues trading near month SPX options.
• Don't assume any MM wants to trade with you at the midpoint. They want an edge, not fair value and the midpoint can be changed with small customer orders like yours.
• You will have to learn to work your orders to find liquidity.
• When trading live, start with smaller lots.

 

[tommcginnis]

should I be concerned being able to get filled and sell 10 contracts at a time in the money? Thank you

Yes.

Watch daily volume: OTM has plenty of volume. ATM will have a bunch. ITM will quickly thin out. UGH! You're likely paying the vig with each trade. And the bid-ask will get quite wide in no time at all -- 50% of the strike widths. UGH!
Go for 'round number' strikes that attract the most traffic -- that will help. (Compare a 3100 put with 3095 or 3105. )

 

[Meridaliving32]

• You should not have issues trading near month SPX options.

What do you mean near month spx options? For instance, i generally trade end of day expirations like Mondays, Wednesday, Friday. Would it be more difficult to get filled on those days?

• Don't assume any MM wants to trade with you at the midpoint. They want an edge, not fair value and the midpoint can be changed with small customer orders like yours.

When you say midpoint can be changed, what do you mean? Does that mean if i set my buy order using a limit at the mid they can fill me at a different price?

• You will have to learn to work your orders to find liquidity.

How can I learn more about this?

• When trading live, start with smaller lots.

Thanks for the advice, i will surely start with fewer contracts until I get the hang of this.



Thank you for replying

 

[Meridaliving32]

Yes.

Could you please elaborate, I know nothing in life is guaranteed. What are some issues you feel I might run into with trading SPX?

Thank you

 

[Robert Morse]

You made it hard to respond the way you did that.

Robert Morse said:

• You should not have issues trading near month SPX options.

What do you mean near month spx options? For instance, i generally trade end of day expirations like Mondays, Wednesday, Friday. Would it be more difficult to get filled on those days? LEAPS will have less customer orders and wider markets.

• Don't assume any MM wants to trade with you at the midpoint. They want an edge, not fair value and the midpoint can be changed with small customer orders like yours.

When you say midpoint can be changed, what do you mean? Does that mean if i set my buy order using a limit at the mid they can fill me at a different price? E.g. MM market 4.00 x 4.50. You bid 4.20, the midpoint changed from 4.25 to 4.35 with no change in the value of the options.

• You will have to learn to work your orders to find liquidity.

How can I learn more about this? Start by bidding low and slowly raising your bid up to your limit to find sellers. Same with sell orders. MM monitor orders looking to do better than their values.

• When trading live, start with smaller lots.

Thanks for the advice, i will surely start with fewer contracts until I get the hang of this.

 

[minmike]

Itm options are not good to trade. They act like futures and the market maker will only trade when they are getting edge. They also have wider quotes. Trading the underlying reduces transaction costs.