how are those super cheap options profitable?

Discussion in 'Options' started by 1a2b3cppp, Apr 11, 2011.

  1. How do you make money selling these like 3 cent options? That brings a premium of $3. After commissions you lose, even if the option is never exercised?
     
  2. Ignoring the sagacity of selling said 3 cent options, some brokers charge 25 cts (or less) for that.
     
  3. Oh. I use Scottrade and it's like $7 + $1.25 per contract or something. So I was like, wtf selling cheap options?
     
  4. If you trade 15-20 contracts a month (round trip), look elsewhere. B/A slippage is bad enough but that rate is too much to swallow (gulp)
     
  5. One gamma spike and you're dead. Good luck.
     
  6. That's the job of the market makers and clearinghouse to have net neutral positions at the end of the day. It shouldn't be your concern.