I've been paying attention to the ATM, Just ITM & and Just OTM Dow options. What has been really confusing me is that the DJX and the options on the DIAMONDS (DAV) seem to move somewhat differently from each other. I know the DJX's are 60/40 for tax purposes while the DAV's may not be. I also realize that DJX's are European while the DAV's are American, but since exercise is so rare and usually does not make economic sense, I'm not convinced that's the difference. Volume wise they both seem very liquid (for options) with the DAV's having more ATM calls. It just seems that on any given day there is a considerable difference between where the DJX & DAV options will open at and how much they'll move during the day. (I comparing like type, strike & expdat.) Any thoughts, observations, comments? Is it just that the spread is so wide in options that differences in price that seem significant to me are just noise in the system? Thanks!
The difference between the opens can be pretty big sometimes, like .60 vs .90 for the same contract specs. And the amount that they move can vary a lot. I guess what you're saying is it just depends on if someone hit the bid or met the the ask and that those .20 spreads we can see in the option world can make the prices seem pretty out of wack? In general, is one considered better, the DJX or DAV? Thanks.