Rule of thumb: excellent spread = less than 2% of bid price, i.e. 1.00 X 1.02, 8.00 x 8.10 good spread = less than 5% of bid price, i.e. 1.00 X 1.05, 8.00 X 8.50, 21.00 X 22.00 aceptable spread = less than 10% of bid price i.e. 1.00 X 1.1, 20 X 22. I trade all three. But if spread is more than 20% of bid, you'd better stay away.
I have always considered the spreads but never had a hard and fast rule of thumb like that. I kind of like it. I may add this to my trading plan. Thanks.
Aren't you glad I talked you out of shorting GTLS? ; ) If you are still interested in trading GTLS I would look for a pull back to the $26.52 - $24.93 range (top 2 red lines on chart below). If it fails to breakthrough this level I would consider a long position of some sort....probably the stock itself since the option spreads and volume are horrible right now. <img src="http://www.fantasydaytraders.com/eqpics/gtls-2.jpg">