Quote from nitro:
Right, I was aware of the VS on the SP500 being exchange traded. I may be able to make use of them in some future project, unless they have the problem you state below, i.e., that they have enormous B/A spreads.
Yes, the spreads are enormous.
Well, it is my problem, but your point is that the solution that I claim as my savior would not help because it would introduce another problem, they would be essentially not trade-able do to enormous spreads.
Correct.
Ya well, that would not surprise me that there is no interest in making markets on them, for a variety of reasons which I don't want to get in to (I don't want to get into a political war with the powers that be). But I don't know if I agree with your premise anyway. People made the same arguments when options first came out at the CBOE ("who would sell insurance on equities? You have to be crazy!"), and now look, we have penny wide spreads in a large portion of the equity-option universe and the penny-pilot program is growing every couple of months.
No, there is huge interest in market "making", just not in market "taking". Yes, you are correct about equity options. In 1973 no one ever thought people would trade them and the spreads were insanely wide. And look at them now. It only took 37 years to get spreads down to a penny. So yes, Nitro, if these were offered tomorrow, you only have to wait till your 75 years old before you can trade them with tight spreads. Fair enough.
