Would you trade this?

Discussion in 'Options' started by matador04, Nov 10, 2009.

  1. spindr0

    spindr0

    Technically, slippage is the difference b/t the price you expect to trade at versus what you actually trade at. An example would be the fill from a market order.

    While I don't know if it's technically correct, many (including me) refer to the B/A difference as slippage.
     
    #11     Nov 11, 2009
  2. erol

    erol

    thanks... i think a lot more posts will make some more sense now :D
     
    #12     Nov 11, 2009
  3. If you'd like to experience "slippage" first hand, throw out a market order (or just watch a time-sales window and assume you had a market order in) during any major news event (Non-Farm Payroll is a good one to watch, since it happens every month and is normally good for a nice move).
     
    #13     Nov 11, 2009
  4. erol

    erol

    but isn't that just market fluctuations?

    or have I misunderstood your post?
     
    #14     Nov 11, 2009
  5. nitro

    nitro

    If that is a chart at expiration, I would almost always take that trade. But I don't have the time to check if it is or not.
     
    #15     Nov 11, 2009
  6. spindr0

    spindr0

    If it includes Nov options expiring in 2 weeks, I don't see how it could be anything other than the chart performance of a June position over the next 2 weeks. That might change your opinion of the "long term."
     
    #16     Nov 11, 2009
  7. It's not at Jun expiration.

    spindr0 gave me an idea: IC in march, credit .40, strangle in Jun debit .55. Paying .15 in premium to wait for a pop seems reasonable especially if it's 7 months.
     
    #17     Nov 11, 2009
  8. spindr0

    spindr0

    AFAIK, it's a 4+ not 7+ month position. Near term dictates.

    You might want to model this one because if you're still using those unbalanced strikes as before, you'll need a March close outside of 2 and 7 just to break even as the condor loss and the Jun time decay spank you inside them.
     
    #18     Nov 11, 2009
  9. I think of slippage as how far I am filled from where I expected to be filled. If I put out an order right now, I can reasonable expect that I would be filled near the current bid/ask (depending on your contract size and bid/ask volumes). If the market is really churning (during Non-Farm Payroll, for example), you might see prices jump in gaps rather than transition relatively smoothly as the would do normally. I might have a stop order at 9500 on the YM and it gaps 50 points. My stop turns in to a market order and executes...50 points higher than I desired.
    As mentioned before, bid/ask spread is another measure...typically that widens as well during volatile times.
     
    #19     Nov 11, 2009
  10. erol

    erol

    thanks! that's clear
     
    #20     Nov 11, 2009