Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Options-Technical analysis -- Ignore unavailable to you. Want to Upgrade?

To: browser who wrote (20)	10/11/1998 5:34:00 PM
From: Caroline	Read Replies (1) \| Respond to of 296

OK, I understand. In an illiquid market (no volume), you have to pay the market maker's price on the buy, and you only get the market maker's price on the sell. They own the spread (difference between bid and ask). When you go to get out of a position in an illiquid market, best bet is to place a LIMIT order but at the market maker's BID price. Now, if the option is bid $2 x $3, put in an offer to sell at $2.50 (split the difference). If they don't go for it after an hour or two, put in a limit at $2. The problem with this strategy is that the market maker can lower the bid while your offer is sitting there at $2.50. Now maybe it's $1.75 x $2.75. Yuck. This is why playing an illiquid market is a pain in the neck. Will check on AUD. Here's a great short pick from the BTTT thread: timely.com Caroline