Would you leg into basic spreads?

[RGLD]

Basic as in 2 legs. I would not leg into an iron condor, probably too much slippage.


If you're doing a Bull spread for example, would you leg into the short put first and buy the Long put later? I've seen options traders just treat it like buying the stock, they put a stop loss on the long/short leg, than, if it doesn't work out, they cover the leg and is out of the trade completely. If it does work out, they'd buy the hedge and has a major advantage, sometimes even making Max Loss a profit.

 

[Baozi]

usually I enter my first order on the most difficult leg (the one with the widest spread) at a good price. If I get filled, then I try entering the easy leg at mid. If not filled within a couple minutes, I match the offer.

 

[ajacobson]

I would always enter the spread as a spread. It makes it less cumbersome for the MM to hedge and it may shave the b/a. Doing it as single legs can mean it goes to two separate venues and requires two MMs to hedge. Spreads can also touch or better the NBBO so you may get better priority.
If you are a Schwab customer the Walk Limit can do it for you.

 

[bln]

Would enter the limited risk leg(s) first and in the infinite risk leg(s) and the opposite then legging out of a structure.

Otherwise you are exposing yourself to infinite risk and infinite loss. One do not want that. How you execute this is up to you, synthetics, structure offsetting, etc.

 

[taowave]

Generally speaking,it's a terrible idea.

There's a reason you chose selling a limited loss vertical as opposed to naked short the put.

Ild rather trade the equivalent Delta of the underlying instead of legging into a spread and getting double wammied if the markets are wide...

Basic as in 2 legs. I would not leg into an iron condor, probably too much slippage.


If you're doing a Bull spread for example, would you leg into the short put first and buy the Long put later? I've seen options traders just treat it like buying the stock, they put a stop loss on the long/short leg, than, if it doesn't work out, they cover the leg and is out of the trade completely. If it does work out, they'd buy the hedge and has a major advantage, sometimes even making Max Loss a profit.