Uncle Frank, re: options spreads.
I'm 100% with edamo here. Some thoughts:
1) The spreads aren't as big as they look, proportionally. I see the ZQIADs are back to about 3 1/2, and on most everything else the bid-ask difference is exactly 3. If Q was a tenth the price, in the mid-30s, then proportionally these spreads would be 3/8 point or so, which we wouldn't even blink at. Implied volatilities, which determine the actual mid-point of the spread (ie, the option's "market value"), are off to the moon, but there's some justification there right now, eh? Today's "boring" 15-point swing aside.
2) edamo says, "look beyond conspiracy"...yea, verily. If the bids and ask you see represent the market maker's best offers (and not other buyers/sellers), then they're essentially saying, "this stock is so high and so volatile that here's the spread difference I need in order to feel safe in guaranteeing I will buy or sell at least 10 contracts from/to you, anytime you ask". Essentially, they're posting the retail prices, based on their perception of the costs and risks of their businesses - which are a tad higher for a QCOM options MM than for, say, one who deals in C.
3) edamo also points out that you have the power to narrow the spread all on your own - go for it! The market maker is giving you plenty of room to "name your price", where essentially you can become the market for the entire rest of the planet. If you want to buy a call, and you're the best bid (even if it's only 1/4 pt above the market maker's bid), then the first person who comes along who absolutely _has_ to sell a covered 2001 LEAP is going to drop it on your doorstep.
prosperous zoology,
-Rose- |
