i am looking at selling premium on some high IV options. The problem on many of these is that the spread is often ridiculous. One I am looking at is $4 bid and $8 ask. Is there any way to defeat that? I realize this is a risky strategy but on that one I placed a limit sell at $7.20 and am not getting filled. Any way around this without selling an option that may be $3 out of the money as soon as it fills?
What to do with very large option spreads?
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If you post the specific option, you may get more practical responses.
Do a 360 with the D-pad, Forward, Down, Back, Up being the correct order to do it in. You can hold block for it to prevent jumping.
COUP Jan 85 put is one but they all look the same, 3 and often more dollar spreads. My instinct tells me to stay away from these but before I give up, I want to see if there is any way around this.
There are likely good reasons the spread is wide! I see no value here even if you could get the ASK!
I don't follow your question. You mean $3 in the money. And i don't see the problem.
COUP has lots of other issues. Merger names typically don't trade tight because market makers are afraid of information asymmetry.
Where is the buy write quoted??
Should be much tighter,,,
Why are you looking to sell that garbage...Better off buying the Delta amount of stock
Should be much tighter,,,
Why are you looking to sell that garbage...Better off buying the Delta amount of stock
1) Find more liquid options with better spreads. Liquid options is always better especially in case if you need to buy back the option to cut losses.
2) ALWAYS ALWAYS ALWAYS use limit orders to trade it at mid-price. Sometimes you might get lucky to get filled at the ask and the option still expires worthless and not go "the other way" but that's if you are very very lucky. Most of the time you should get filled at mid-price. If you can't even get filled at mid-price, then it's time to choose another option. That means the option is very very illiquid. No point dallying in them, according to my experience.
I usually stay away from options that have wide spreads. It's just not worth it.
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Part of this is also due to the explosion in number of contracts (exp dates and strikes) as well as number of options exchanges, all of which reduce liquidity and widen spreads, to the benefit of a small number of large options mm's that buy order flow from retail brokers. So yeah, you got free commissions but pay $400 in spread per contract.