using options to do this...

Discussion in 'Options' started by Sky123987, Jan 4, 2008.

  1. I day trade pairs. and normally hold stocks for 4 to 5 hours. I have been trading the actual equity for as long as I've been trading the strategy?

    Would it make sense to trade the options of the underlying companies? Which is cheaper in commissions stocks or options... I remember comparing a $50 stock to buying a Index future contract and trading the future contract was much cheaper.

    I trade companies that do > 1 million shares per day

  2. MTE


    Options are not designed for daytrading due to lower liquidity and higher slippage, so overall it would cost you more.
  3. Under certain circumstances, I also day trade pairs... sometimes even holding a few days. With these, I'm looking to squeeze out 20-30-50 cts net. Options are not viable for this because of larger B/A slippage and a generally slightly higher commission rate.

    However, if your gains are larger and your success rate is better than average, options could be a better choice since they provide leverage.

    The best way to determine this would be to paper trade them along side your actual equity position.