Interesting. Unfortunately, this is all within Registered
accounts, so I'm not allowed to sell-to-open any options except
Covered Calls. I can only buy Calls, buy Puts, and sell
Covered Calls.
It seems like the bid/ask spread widens when I place an order,
hoping to draw me into chasing it. If I adjust my bid price
within a minute or so, the ask will continue to move up, even if
the underlying isn't moving. However, if I do nothing, the
underlying will eventually start moving the bid and ask prices in
tandem with it and if I get lucky, it will move through my bid
price and fill.
This happened to me with VNQ--an ETF that trades almost 6M
shares per day. The option bid/ask spread is currently almost
8% (1.90 - 2.05).
Even on SPY options, I regularly see a bid/ask spread of 2%
+
Is it because there typically is such a big potential percentage
profit to be made that the market makers know you'll tolerate more
slippage on entry/exit?
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Interesting. Unfortunately, this is all
How do you folks deal with the (often huge) bid/ask ...
Posted by rojoch on 24th of Dec 2019 at 01:42 pm
Interesting. Unfortunately, this is all within Registered accounts, so I'm not allowed to sell-to-open any options except Covered Calls. I can only buy Calls, buy Puts, and sell Covered Calls.
It seems like the bid/ask spread widens when I place an order, hoping to draw me into chasing it. If I adjust my bid price within a minute or so, the ask will continue to move up, even if the underlying isn't moving. However, if I do nothing, the underlying will eventually start moving the bid and ask prices in tandem with it and if I get lucky, it will move through my bid price and fill.
This happened to me with VNQ--an ETF that trades almost 6M shares per day. The option bid/ask spread is currently almost 8% (1.90 - 2.05).
Even on SPY options, I regularly see a bid/ask spread of 2% +
Is it because there typically is such a big potential percentage profit to be made that the market makers know you'll tolerate more slippage on entry/exit?