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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: upanddown who wrote (33041)	9/29/1998 11:21:00 AM
From: Knighty Tin	Respond to of 132070

John, I will use market orders in large cap stocks, but almost never in options. They simply play too many games and with some of the contracts I play, the market maker/specialist and I are the only ones in the game. I always get my comeuppance from tech nerds who seem to lack the humor gene. Let your daughter make wafers of sand. They're better than mud pies. <G> MB

To: upanddown who wrote (33041)	9/29/1998 5:40:00 PM
From: eabDad	Read Replies (1) \| Respond to of 132070

John: As someone who has traded options for many years, I have played the game of putting in bids vs. market orders for options. The answer depends on the liquidity of the option. If you are trading an option with a daily volume of 50 contracts or less, Michael's right, just put in the market order. For heavily traded contracts, you can put in a bid ... but only if you believe the stock will not move for a while. Usually the spreads are thinner as well on these active options. I cannot count how many potentially profitable positions I did NOT enter for lack of 1/8th. You could play some games to determine how willing the market maker is to part with the option. On a spread of 3/8, I have often put in a buy order 1/8 below ask to determine whether he takes it, or makes my bid the new bid, and then he usually pushes the ask up 1/8 to make the spread 1/4. This happens when he does not want to let go of it. At that point I usually cancel it, and place a market order. If he takes it, then I put in a second order at the bid since it is probably going there next. I would not recommend this, though. Sometimes I feel warped and play games. One other trick for NYSE listed stocks people are not generally aware of. Since the NYSE is auction bid system (without a market maker forced to be in the middle), buy orders of 1000 shares or less can be executed at the bid. At 1000 shares and below, your orders to accept shares from a seller on the floor are placed ahead of the market maker who is on the floor. The difference in concept is the difference between going and getting the stock vs. letting the stock come to you. This rule is in place for the benefit of the small investor. The same works for sell orders at the ask. The best phrase I ever heard was "Remember you are buying a stock to go up, but you are buying the stock from somebody equally convinced it will go down." Puts things in perspective. BTW, I am not a technonerd. Z