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Strategies & Market Trends : The Covered Calls for Dummies Thread
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To: Kayaker who wrote (2592)10/12/2001 7:42:21 PM
From: Kayaker  Read Replies (3) of 5205
 
FWIW, here's an example of why I find it really helpful to have Time & Sales data when trading options (I use QCharts). These are the various quotes over a 2 minute period this afternoon for the QCOM Jan 03 70 puts. I shorted 10 contracts at 27.10 as indicated below (see the ***).

As shown, the various exchanges vary greatly in their prices and spreads. CBOE has a 1 point spread while the Pacific Exchange (PACX) has a (crappy) 3 point spread. My brokerage is TD Waterhouse and orders for these options are usually going through the PACX (which I'm not too happy about). But, since I'm able to see the bid/ask on the other exchanges, I put my price in (selling at the bid) at 27.10, even though their (PACX) most recent quoted bid was at 26.80.

And, as I understand it, this is why option bid/ask prices appear to bounce all over the place if you don't have the Time & Sales data to look at, i.e,. you're seeing quotes from different exchanges. Many times I've seen an exchange update only their bid or ask, so if you don't have Time & Sales information, you are looking at, e.g., the bid from one exchange and the ask from another which can result in the bid being higher than the ask or other whacky looking spreads.


     Date     Time   Bid/Ask   Exchange

1  10/12/01 13:54:15  27.00  Bid cboe
2  10/12/01 13:54:15  28.00  Best ask cboe
3  10/12/01 13:54:17  27.10  Bid cboe
4  10/12/01 13:54:17  28.10  Ask cboe
5  10/12/01 13:54:26  27.00  Bid cboe
6  10/12/01 13:54:26  28.00  Best ask cboe
7  10/12/01 13:54:39  26.80  Bid pacx
8  10/12/01 13:54:39  29.80  Ask pacx
9  10/12/01 13:54:53  27.60  Best bid i
10 10/12/01 13:54:53  28.10  Ask i
11 10/12/01 13:54:59  27.50  Best bid i
12 10/12/01 13:55:11  27.00  Bid phlx
13 10/12/01 13:55:11  28.00  Ask phlx
14 10/12/01 13:55:22  27.10  5  Trade pacx ***
15 10/12/01 13:55:22  27.10  5  Trade pacx ***
16 10/12/01 13:55:44  27.60  Best bid i
17 10/12/01 13:55:44  28.20  Ask i
18 10/12/01 13:55:51  27.10  Bid phlx
19 10/12/01 13:55:51  28.10  Ask phlx
20 10/12/01 13:55:54  26.90  Bid pacx
21 10/12/01 13:55:54  29.90  Ask pacx
22 10/12/01 13:55:56  26.80  Bid pacx
23 10/12/01 13:55:56  29.80  Ask pacx
24 10/12/01 13:55:59  27.60  Best bid i
25 10/12/01 13:55:59  28.20  Ask i
26 10/12/01 13:56:20  26.90  Bid pacx
27 10/12/01 13:56:20  29.90  Ask pacx
28 10/12/01 13:56:21  27.10  Bid cboe
29 10/12/01 13:56:21  28.10  Ask cboe
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