VOLTAIRE'S PORCH-MODERATED Message Board

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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: Clappy who wrote (5232)	10/3/2000 2:54:42 PM
From: elpolvo	Read Replies (1) of 65232

optionable clappy- one thing to consider with those low priced near term options is the difficulty of getting in and out. these things aren't as liquid as stocks and dealing with MMs in options is not the same ballgame as stocks. you need to use limit orders on both the buy and the sell. sometimes there is a rather large spread on the buy and ask and getting filled on your order even at the bid (for a sell) or ask (for a buy) is not automatic (sometimes it's hard). 1 3/8 for Oct 45s. A pop to 1 3/4 is more than a 25% profit. that's a difference of only 3/8. you may have a spread on the bid and ask prices that is that large. trading on paper is much easier than making the real deal. i wouldn't try a trade like that unless i expected a much bigger increase (say a double) and even then you would be lucky to make the trades happen just right and get 50-75%. something less than that would hardly be worth the risk. but what do i know? i hope some of the options traders here will jump in and confirm, deny and/or expand on what i'm muddling through here. -polovato

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