If you trade options using market, you will buy at ask and sell at bid. But on ET we don't trade on market orders, we always use limit orders. Usually but not always, you can buy/sell at roughly mid between bid/ask so the slippages are not as bad as you said. You won't get mid if you are DOTM or DITM. With DITM you usually get less than intrinsic if you sell to close and for DOTM often the bid/ask are so wide you are better off not trade those. Good luck.
The b/a on many options is a big problem. You might get a fill in the middle both ways, but don't bet on it. And don't bet on getting a fair price when the thing moves your way. They love to keep the bids at GYP levels, to victimize YOU.
That's the excuse, but it makes no sense. There is a fair value. They could make a market x cents either side of that, No real reason to make the spread 20 to 50 VOL wide.
You realise that option price is a guess-timate - so thinking mid is fair value would be detrimental to the market maker. If someone with better knowledge hits the ask (with spread of 1cent) with volume, forget about the prior 'fair value', it is no more the fair value. It is that uncertainty that compels them to demand a bigger cut.
I gave it some more thought today and I think my method of trading would actually work by buying put options instead of shorting. Typically when I trade long, I might be averaging a profit/loss of about 1%. I can count on about 0.2% for my slippage, commission etc. So my average profit should be around 0.8%. When I look at the bid ask spread for put options, the lowest I see is around 1 to 2% so instead of 0.2% slippage, I'm probably going to end up with about 3% slippage. However, because of the leverage, my average profit should be around 10%, instead of just 1%. That would leave me with a net average profit of 7%. I experimented today with the trading simulator on Interactive Brokers. I shorted about $65,000 of NFLX which was 225 shares. I also bought 80 put options for around $65000. My expense to short the 1000 shares, might be around $100 for slippage and commission. My expense to buy the 80 puts might be a lot more at around $1200. However you can see that the profit for my puts makes the expense worth it.
There is an article about how to short stocks like TSLA with 77% likelihood to win, small risk and high profits of stock does anything except go up a lot. It makes good profits at sit still, and has big positive Theta. Here is link. https://seekingalpha.com/instablog/...hance-win-make-35-percent-sits-still-low-risk starts like this How To Short Tesla With 77% Chance To Win, Make 35% If It Sits Still And With Low Risk Nov. 16, 2018 10:26 AM ET | 8 comments |About: Tesla, Inc. (TSLA) Summary Author today bought a TSLA option spread that does everything in the title and more. A good case can be made this is totally superior to shorting the stock and to another stock option strategy that has been suggested. This trade makes a 35% profit in 5 weeks if the stock is unchanged, a 189% profit at $365 and a 14% profit if $315 or lower. Risk is only $425 with a 77% chance of a profit. Bottom line is you have to be very wrong to lose anything. Being a little bit wrong generates the highest profit. Sound too good to be true? Below you will see an Etrade option calculator for a real trade done 11-13-2018 on Tesla (TSLA) that verifies the above bullets.