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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: NateC who wrote (10787)	5/14/1999 1:19:00 AM
From: tuck	Read Replies (1) \| Respond to of 14162

Nate, I put in the order after hours; obviously it got executed when the market was open for business, as I noted earlier today. One can do that with online trading. I also have heard of a rule about not placing orders at open and close; Dan and Dave, who seem to be our daytrading experts currently in residence, might be able to expand on this. I do not know if that rule was meant to apply to options, which don't open until at least twenty minutes after the stock does. I calculate my risk/reward ratios and generally use limit orders in an attempt to keep MMs from eating my lunch on the spread, no matter what the time of day. However, as I wondered aloud when trying to execute my second roll up on Edify, it might be advisable to use market orders if the price is moving really fast. If, after the first limit order to buy back the calls is executed, the stock moves away from the limit price of the second limit order, one could very well loose a lot more than the 1/8 one hoped save on the bid/ask spread by not using market orders. There's a chance two market orders would execute before the stock moves so far as to cause that kind of loss. Ideally, one would want to specify a net, as one would with a spread or a buy-write (in fact, a roll is exactly like a spread as far as that transaction is concerned (as opposed to the resulting position)). This especially makes sense considering that folks like us, who are hedged, can afford to be patient: if for some reason the broker can't fill your net order right away, it shouldn't hurt much. When I'm playing with a lot of money, I intend to pursue the specification of the net debit (or credit) because it's the safest method of execution, and the more expensive commissions such orders entail will be worth it. All this stuff is explained in McMillan's "Options as a Strategic Investment," pages 48-49 and 151-153. Cheers, Tuck