why is bid on july rprx 5 dollar call only 30 cents

Discussion in 'Options' started by trc4949, Jul 8, 2011.

  1. trc4949


    newbie question.

    why is the bid only 30 cents on the July 5 dollar call for rprx ?

    RPRX today is trading at 5.73

    shouldn't the bid be at a minimum 70 cents since the price is 70 cents above 5 dollars ?

  2. The current market that I see is .30 bid .95 ask with stock last print 5.73. This stock looks illiquid. The market makers are just showing a wide market.
  3. Blotto


    If the stock is shortable, why not bid say $0.40, and if you get anything short the stock and exercise the option to cover. You might make a profit.
  4. FSU


    If you put a .40 bid in, you will be joined by the marketmakers. I played with these after I saw your post and was immediatly joined for every bid I put in ( I stopped at .55). For thinly traded stocks, the MM's will typically leave a wide market, but if a good order comes in they will trade it immediately. So if you had offered these calls at .55 on that original market, they would be traded instantly.
  5. tomk96


    as a market maker, there is no point in disseminating tight quotes on options that aren't likely to trade. it only leaves you open for errors to happen.
  6. It's highly unlikely that you'll ever buy any wide spread options trading that far below parity.
  7. Wide spreads are an invitation for dumb money. If you fast finger your order and accidentally place a bad order, you are the dumb money. Wide spreads on 3 letter critters in the pre/post market often anb dumb money.
  8. Fast finger entry = unforced error.