So if you have an indicator like % R or if you are wondering if you add a new indicator to layer to existing ones....how would you test it's efficacy against a call vertical, a put fly, an ATM condor? ... hint.. the answer is in this post...
Go back and look at the bid/ask chart for the atm ES options when Brexit result was in No good having super duper software to work everything out, and then the MM's pull the plug..LOL
Is the flattening of the TV of OTM options near expiration inherent to the pricing model or it's due to the illiquidity (exit cost)?
Illiquidity. Market makers have to hedge their positions and for options that are very cheap (near zero) it is just not cost effective to their business model so they widen the bid/ask spread to compensate. When the option you are trying to buy/sell should be 0.02 a bid ask spread of 0.05 will represent a very large percentage of its price, hence why the extrinsic value approaches flatness for OTM (especially Far OTM) options and in particular as expiration approaches
I don't see any logic errors in my post. I stated: "Selling an ATM put on a stock or ETF is less risky than buying 100 shares of the underlying. So if you think that's too risky, you shouldn't be trading more than 99 shares of stock / ETF." Can you point out the logic errors so that others here are not mislead by what I said? Does anyone else here object to my claim?
Trading options is a pipedream. 70% of the time market will chop so directional trades will expire worthless. Once in a while you will be right with direction then you will get out your position way too soon enough to go crazy. Then you will start trading weeklies to make more money which will be a disaster. I have traded options more than 3 years. You will overeat, do bad habits drink or smoke a lot.. I gained more than 50 lbs last year. I wish I would never started.... Learn how to fix a junk car, flip a property, import from alibaba& sell stuff online, drive uber.. But seriously stay away from options.