options on NQ so wide? (ask/bid)

Discussion in 'Options' started by jasonjm, Oct 16, 2006.

  1. jasonjm


    is there any reason for this?

    and volume on a lot of stuff just seems to be zero each day?

    what gives?
  2. Yes. The reason is that nobody trades them, hence the huge bid/ask spread and zero volume. Stick with ES options or even ER2, those are much more liquid than NQ. Or just use QQQQ options instead.
  3. jasonjm


    thx will look at QQQQ
  4. Or NDX or MNX (CBOE full sized and mini-sized nasdaq cash index options)
  5. jasonjm


    hey guys thanks for that info.... much appreciated!

    the NDX options look like the best to me!

    what are my best choices for selling options based on S&P and RUSSELL in your guys opinions?

    right now I got ES options and ER2 options loaded onto my platform, are those guys the best bang for the back?

  6. NDX rocks. Make sure though that you're fully cognizant of contract sizes. There's great variance between products. For example I believe NDZ is forty times the size of the Q's.

    All S&P 500 options are extremely liquid. SPX is the volume leader(by a wide margin) but ES options are quite tradable and offer both fungibility and haircut relief against futures.

    I don't know much about options on ER2. I do know options on the index itself ($RUT) suck but options on IWM are fairly ok.
  7. jasonjm


    wow selling a naked option on the NDX uses up a LOTTA margin, like close to 20k???
  8. just21


    Just wait until REG T margins are done away with in November, should drop significantly after that.

    I wonder if some of the ES option business will migrate back to SPX after this event?
  9. omcate


    Yes. This is assuming that you trade via an online broker with LOW margin requirements for selling options, eg. Interactive Brokers. Other Brokers like OptionsXpress have imposed much higher margin requirements.
  10. Be very very careful selling options. Make sure you know what you're doing, how the options are exercised (european vs american exercise) and when to expect a potential early exercise.

    Another thing to consider is that even though a large contract may give you more leverage and lower commissions, you can't leg out of the trade to lower your exposure if it moves in your favor. If you trade a smaller size contract you'll pay more in commissions (although that should be a small amt if you use IB or a similar broker) but gain the ability to lock in partial profits.

    Also keep in mind that it's very difficult to make money using options. Be sure you don't overpay on option purchases, and be sure you're being adequately compensated on option sales for the amount of risk you're taking on. For example selling far out of the money puts on SPX can make you a "nearly" guaranteed profit every month until a 9/11 type of event occurs, then you give back all the profits over the last 5 years plus maybe your house....
    #10     Oct 17, 2006