The conversation seems to have devolved a bit.
But here's a pull from yesterday afternoon.
Make of it what you will.
But here's a pull from yesterday afternoon.
Make of it what you will.
When is too many options, too many?
- Thread starter HappyTrader
- Start date
It is very interesting to find someone having similar problems.
From my experience, in thinly traded options, all bid/ask are put up by MM. If my trading volume was much greater than MM's bid/ask quantities, I moved the market. It is also true that when I held most OI, in a jam I often could not find anyone to trade with unless I gave my position away.
I am just a mom and pop retail trader so could be doing it all wrong. I like some feedback and coaching too.
There are a couple of things to consider overall.
How liquid is the underlying.
Is the option multiply listed.
Am on planning on exiting early or for some specific event.
Thinly traded and low open interest are GENERALLY more of a concern at exit than entry.
Good liquidity in the underling and multiple listing is a plus a huge plus. Multiple listing and thinly traded don't really go hand in hand, but names often go from unpopular to popular for some event and vice versa.
There isn't much liquidity outside of the top 10 or 20 names based on screen markets and it generally worse on down days.
Can your broker's trading desk algo an order so it hit's multiple markets when you want to exit?
If you need to get out of 100 contracts - hit the top of the book on 10 exchanges - your transaction costs may go up,but your overall friction may be a lot lower. Of course it needs to listed on 10 exchanges for that to work.
How liquid is the underlying.
Is the option multiply listed.
Am on planning on exiting early or for some specific event.
Thinly traded and low open interest are GENERALLY more of a concern at exit than entry.
Good liquidity in the underling and multiple listing is a plus a huge plus. Multiple listing and thinly traded don't really go hand in hand, but names often go from unpopular to popular for some event and vice versa.
There isn't much liquidity outside of the top 10 or 20 names based on screen markets and it generally worse on down days.
Can your broker's trading desk algo an order so it hit's multiple markets when you want to exit?
If you need to get out of 100 contracts - hit the top of the book on 10 exchanges - your transaction costs may go up,but your overall friction may be a lot lower. Of course it needs to listed on 10 exchanges for that to work.
How do I do that?
Not sure what you're talking about. You can trade at middle'ish prices in ATM options in hundreds of stocks.
Not if you trade several thousand contracts a pop.
Are you in fact trading several thousand a pop or is it just hypothetical ? Often easier to get several thousand done because an institutional broker will facilitate and tie the trade to stock. Again you increase you transaction costs, but lower your friction overall.
You'll need an institutional brokerage relationship established. So you'll need a level of activity and capital that interests them. The interest issue will be key so it will depend a lot on the other business you bring. Your order becomes a qualified contingent cross. About 75% of all trades 1000 or more are QCCs. Very name dependent.
You'll need an institutional brokerage relationship established. So you'll need a level of activity and capital that interests them. The interest issue will be key so it will depend a lot on the other business you bring. Your order becomes a qualified contingent cross. About 75% of all trades 1000 or more are QCCs. Very name dependent.
Of course hypothetical.
Me? Perhaps 5-10% of that at most. Are you telling me is if I trade over 100, I should talk to my broker?