Options Trading: Minimizing Friction Costs?

Discussion in 'Options' started by Time4Pizza, Dec 22, 2018.

  1. tommcginnis

    tommcginnis

    To answer your immediate question: I am not familiar enough -- when I have shopped, I have paid more, but the sample size is quite small -- once a quarter for 5-6 years? So, I saw no reason to change, but based on loose data.

    Back to your OP, you'll find a better market on 'fence post' strikes -- the ones that are there from the earliest promulgation of the expiry -- big, round numbers, in 10s and 50s, for example.
    (For small example, if you wanted to short the SPX at around 2400, you'd have a harder market than 2395 or 2405. Same with a spread, too -- trying to sell of an "orphan strike" long is a pain, a time-waster, and a dollar-eater.) If you can plan your exits to not be on orphan strikes, but on big ol' fencepost strikes, you'll be a happier camper.
     
    #21     Dec 24, 2018
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  2. Good point. I do try to generally stick to the big round number stirikes when I can, but haven’t thought about it much. It’s isually just out of habit, but moving forward I will do so keeping that in mind which should help.
     
    #22     Dec 24, 2018
    tommcginnis likes this.
  3. ironchef

    ironchef

    I can't find any 70 delta OTM options.
     
    #23     Dec 28, 2018
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  4. ironchef

    ironchef

    I don't think that is true. All things been equal, option price goes up as sqrt(t).
     
    #24     Dec 28, 2018
    Reformed Trader and tommcginnis like this.
  5. Ilgan

    Ilgan

    It is quite normal to see such market downside correction considering the real expectations on the next FED moves. As interest rates are up I am expecting this correction to end somewhere around year-end. Sometimes you need to involve a little bit of fundamentals into trading
     
    #25     Jan 22, 2019