Basic question, when anticipating how much income I am generating from writing a call/put, do I look at the bid price or the ask price? If bid price, does it mean that I won't get anything if there are no bid prices that have been published?
It depends. Consider open interest before targeting an option to trade, so you know how liquid the market is for the option. That said, generally, the more liquid the option the smaller the bid-ask spread.
If you're targeting a relatively liquid option, I'd focus on the ask, as the market is sufficiently fluid to move around the bid-ask. However, if you're targeting a relatively illiquid option security, you might be more realistic focusing on the bid. Depends upon your patience, how quickly you want your order filled. An offer to sell @ the ask can go unfilled for days, if never.
No change for me yesterday. Two orders I had in did not get filled. Have learned that patience can make a big difference. Don't get focused on the moment, on the hour, or even the day (unless you're a day trader). Best to keep the long term in mind. |
