Trading strategies with lower spread?

Discussion in 'Options' started by mizhael, Mar 5, 2008.

  1. To trade volatility, what trading strategies can I use in addition to straddles? The straddles have too much bid-ask spread ...
  2. A straddle has the LOWEST bid-ask spread. There is no better.
  3. Trade the $VIX ..
  4. bt116


    Can u explain this please?
  5. A straddle (the ATM straddle) involves ATM (or close) put and call. These options have usually the highest volume/liquidity, which generally leads to the lowest bid-ask spread. Check any option series and you should be able to see that bid-ask spread is tighter closer to ATM strikes. For instance check IWM and QQQQ, and you will be able to observe it.
  6. Maynot be appropriate for someone of his experience.
  7. bt116


    ok. i'll buy that. but i think your sort of replacing atm options having the tightest bid/ask for straddles having the tightest bid ask. right?
  8. Technically long call short stock or long put long stock is a straddle too. If you wanted the greatest amount of Vega per expiration you’d look at the atm straddle, but you could also do 2 calls and stock or 2 puts and stock.

    As long as you stick with an underlying that’s listed on 5 or 6 of the exchanges and has reasonable volume you’ll find the spreads in the options very very tight these days. In many case a penny or two wide.
  9. I agree too. We should compare ATM straddles to other ATM volatility trade strategies...
  10. rosy2


    PM me for a lower bid/ask
    #10     Mar 5, 2008