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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Greg Higgins who wrote (6669)	2/7/1998 1:41:00 PM
From: 4 - Bob	Respond to of 14162

Greg, Thanks for your in depth response. I think my order change was more akin to naiveness than arrogance. Certainly the market has humbled me enough many times that I would never knowingly assume an arrogant posture. Your discussion of minimum tick changes and order fills was extremely clear and now makes more sense to me. After reviewing some of my order fills over the last few years, I see that I have been lucky that this hasn't happen before. Thanks again for plugging up a crack in my trading armour. Live Long & Prosper, 4-Bob

To: Greg Higgins who wrote (6669)	2/12/1998 9:45:00 AM
From: Esteban	Read Replies (1) \| Respond to of 14162

Greg, Reading your response to Bob about limit order vs. market order was very helpful to me and brings up a question I hope you will clarify. You said: In order to make a marketmaker give you a fill inside the spread, you have to make him (or her) uncomfortable. On stocks which everybody trades, they might split the spread if there is lots of action and they don't want to narrow the spread. In a stock like HMTT, where the last trade took place the day before, that doesn't make them uncomfortable. They'll let it change, and maybe even lower the bid. The way to make them uncomfortable is to narrow the spread so much that if they don't respond to your ask, they risk someone else using your ask to go the other direction. If you try to write at 9/16, you become the offer. Someone looking to buy a call, gets to buy at your offer price. They don't want that. They want 3/4 to be the offer. They become uncomfortable and fill your order. Does this mean there is a limit order display rule similar to the new Nasdaq rules for stocks that require the MMs to display your order as the best ask/bid if they choose not to fill it. Assuming it meets the minimum tick size and is for the minimum contract amount (which is 100 shares of stock I know but I don't know the minimum option contract amount.) I have been lurking and studying and paper trading the strategies presented here and I have appreciated your thorough and patient answers to many questions posed in this forum. I have seen hardly any discussion of the limit vs market order question and with the large size of the spread in percentage terms on options, it seems that any discussion of this topic would be valuable. Esteban