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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (980)	4/16/2004 9:20:53 PM
From: Steve168	Read Replies (1) \| Respond to of 1064

Dan, your detailed answer is deeply appreciated. I noticed the option bid and ask spread is pretty big percentage wise to the premium. For example, a 10 cents spread on a one dollar option is 10%. Does the discount brokers show our bid to the market and may execute it if another customer want to take it? One friend said one can only buy at the ask and sell at the bid, the spread is market maker's cash machine. Is this true? Did anyone had buy orders filled at bid price, or sell order filled at ask? What broker is that? My model is telling me the market is very close to the top and down side risk is the highest in over two years. I am planning to buy some QQQ puts. Any other instrument I can use if I believe the market is going down at least 10%? I heard about futures but not sure how it compares with options/puts. Thanks for any answer/comment.

To: Dan Duchardt who wrote (980)	4/16/2004 11:39:47 PM
From: Dominick	Read Replies (2) \| Respond to of 1064

Dan: On another site, someone stated he wrote some naked puts and if he get's assigned he'll sell the assigned stock and use his funds to make up the difference for the loss. I said if he doesn't have sufficient funds by T=3 that would be considered freeriding due to buying and selling without paying for them. He said he checked with OptionXpress and their broker said they don't require funds to be deposited as long as you let them know by Monday after assignment. To me that means I could take possession of thousands of shares without sufficient funds to pay for them and immediately sell them as long as I have enough funds to cover the difference. Does that sound right to you? Dom