executing in extremly illiquid stock options

If your approach makes sense usually in principle the transaction price is not crucial, as you can just change the exit price accordingly. The question is why on earth one has to make his life miserable dealing with monster spreads and transaction risk when there are more suitable instruments to use. It just makes no sense if the real objective is to print $$$...

 

It's a deep value play. There is one event which is going to push the stock from $20 to > $60. If the trigger evemt doesn't work out the stock could tank to < $5. The stock will move extremly fast or even gap so no chance to get out if it tanks and probably slim chance of getting in if it rises instantly.
See that is a very special situation. I wouldn't brood about that for fun.
I estimate the chances for the up move to be 80% and down 20%.
Let's assume I am willing to invest $30k while the maximum loss shall not exceed $10k.
Given those restrictions and estimates it would more rational in my humble opinion to buy calls (even if they are illiquid) instead of the stock.

 

Essentially, gambling uses illiquid options. Really leading nowhere, in terms of consistent $$$.

You will find yourself essentially locked in a trap. It's like putting your head in the jaws of a lion waiting for some crumbs of meat to fall from its teeth and expecting that the lion, by some strange case of fate, won't take your head off instead

Sure it is fine if you like the thrill and adrenaline of the gamble..., but it has nothing to do with consistently profitable trading

 

You don’t know what you are talking about.

Which option is likely to be mispriced? One where 10,000 people are modelling or one with 2 people modelling?

 

At IB you can put the IB model price between the bid/ask in option trader. Right click on the header of the columns and choose model from the options sub menu.

Then walk your price up/down towards the model price.

 

Good to know! Thank you!

 

Yes, you example resembles many clinical stage biotech companies. Their options are mostly illiquid and with mile-wide spread.

I trade those options because to me it is just a cheap leverage vehicle and they are quite often miss-priced. I am not a good option trader, simply cannot compete with folks like @destriero trading traditional option vehicles.