Herm,
There is something that we did not discuss here, but is very important, IMHO:
How to place an option order?
What I noticed was that, say the spread was 1 x 1 1/2 on a call option, so I placed my sell order at 1 1/4, splitting the spread. Immediately, the spread moved to 7/8 x 1 1/4, and remained there until either
- I withdraw the order and placed a market order (which means I lost 1/8 compared to just place a market order to begin with),
- or if the market moved against my order (Stock goes up 1/2), so the MM was forced to change the spread to 1 1/4 x 1 3/4 and filled my order.
From your experience, what would you do? Place limit order to split the slippage, or just place a market order? Sometimes, the spread is so wide that a market order does not make sense. From my experience, if the market is moving fast and the spread is less than 1/2, I just place a market order. A friend of mine said he was so fed up with the wide spread in option, and the lack of liquidity in the secondary market, that he'd rather sell the stock and buy it back when the stock drops instead of doing CC.
I appreciate your comments.
//V |
