Not saying they don't exist, but I've never seen a five dollar spread. I suppose at the right strike and expiry, there could be.
I doubt the quotes were incorrect, but anythings possible. They were supplied by clicking Options Chain at Big Charts. (after drawing a chart of course) Maybe that was a rarity. Market commentators are calling this rally the biggest in two decades ... maybe it's time for rarities. Yes they were for March ... I see similar strike price calls for April with $1.50 spreads after the close 3/21/03. First in the money call has 1.50 spread, near the money call has 1.20 spread ... these are typical of spreads quoted today. (OEX) Maybe the little time to EXP. had a lot to do with it.
These were free option quotes supplied by http://bigcharts.com Just enter a symbol (OEX) draw a chart Then Click Options Chain I made two post mentioning different contracts ... here's the skinny: My original post was ... OEX closed the day 3/20/03 at $449.92 and at the close, $445 March Calls were bid at $3.30 ask $8.10 for a $4.80 spread. I was quite amazed that the spread would be so huge. However since those options would expire at the close of the very next market day, perhaps that's an explanation for the incredibly wide spread. I haven't really got a conclusive answer yet. --------------------------------------- Second Post --------------------------------------- OEX April Calls at strike price of $450 at the close of day 3/21/03 are bid at $16.80 ask $18.30 for a $1.50 spread. --------------------------------------- Even at a buck and a half the spreads seem to put you at a terrible disadvantage. In this thread someone mentioned a reputable OEX option daytrader that will probably come through with a solid explanation for me ... if so I'll let you know. I'm taking a long look at the OEX, SPX and the NDX ... which is best to trade simple calls and puts on and why? I usually try to capture a three day trend on single stock options (simple calls / puts) and want to learn to trade index options.
The media got it wrong again, sorta. The real truth to the "biggest rally in decades" is limited to a Monday-Friday timeframe. There have been many larger moves of greater percentages during 5 (trading) day consecutive periods, just not exactly Monday/Friday. The $5 spread is typical of closing price quotes. The tighter $1 to $1.50 spread is more common of SPX (and others) while the market is open. I agree that a limit order .20 inside the B/A will enable the patient trader to avoid paying full price. More folks thinking and acting like this and we wouldn't have these onerous spreads. Then again if you're making a living capturing them....