Should these limit options orders fill?

September 18, 2010 by  
Filed under Option Trading

If you don’t actually trade equity options, please don’t answer. I need answers from people who have actual experience buying and selling options for real money.

(Note: I have traded options in a limited capacity for 8 years so I am not a neophyte. )

I am testing a new options strategy on SPY, the SPDR for the S&P 500 which is very active both for the security and its options. My strategy depends on getting in and out at prices of my choosing. I have been using the Virtual Trading engine at OptionsXpress to test my strategy and have found that it is not unusual to submit a limit order at the bid or ask and have it not fill. I am not placing large orders; a transaction of 5 or 10 contracts is typical. Consequently, it seems strange for me to enter a sell contract at 3. 25 and see the Bid/Ask sit at 3. 15/3. 20 and yet my order can spend several minutes in an open state. I understand that OE’s Virtual Trading is pretend so I am trying learn if in the actual markets, a small order at or better than the current price would be executed.
Thank you for your answer. I guess maybe my question wasn’t completely clear. I was trying to indicate that my ask was at or below the lowest bid (or that my bid was at or above the lowest ask), in other words that I was seeing a situation in which my transaction should have been executed but wasn’t and would stay open for an extended period. I have found that if I do market orders I get unpredictable fill prices so I would enter an order at a point such that I would know where it would fill if it did in fact fill.
Concerning “large orders” that was also part of my confusion. It was my thought that small orders at the proper bid or ask should execute. I could understand if an order for 500 contracts were to remain open but people actively in the market seeing an order for 10 contracts at the ask price would snap it up as easy money in a rising market trend. I am intentionally trying to keep my contract sizes such that there would be no impediment to my order being filled.
I see now that as hard as I tried to write my original question correctly I got it wrong and wrote my entered ask above the lowest ask and proposed a situation that would not result in a sale.

Day trading SPY options: How can I do this better? (Long question)?

September 14, 2010 by  
Filed under Option Trading

(Note: I have experience in real money with the options that go back to 2000, first flame covered in my account WRATH and the calls with long in my account of cash although nonexperience the day of commerce with real money that I have 25K to park in an account to satisfy. trading landlord of norms of the day and another one of 10K to make the purchase real of the contract.) I have a work that allows to maintain an eye me in the market of action in real time. As of January I began to play with the motor of virtual commerce in OptionXpress, daytrading SPY options. My strategy is rather modest; I can buy 10,5 contracts ITM, or sale or based on the direction of the market, and sell when I see the inverse tendency. I chose 10 contracts because I believe that with a small size so that, if I present/display an order of sale to the supply that must fill immediately unless the market is moving very fast what the gain allows me to make sure if the tendency is reversed. I can abrir a position simultaneously, never to leave writing-desk with an open position and am 100% in cash in the market near every day. I use SPY because to be a basket of 500 actions that is protected suddenly she moves drastic in the price to give time me to leave a position with a minimum loss if the price goes in opposite sense by me. My immediate goal is of $ 100, after commissions by round trip, an objective that it requires only of $ 0. 15 move in the price of the option. Not always they guess right in the direction, 4 of each 5 are typical, and I am of compensation among $ 400 and $ 500 per day days 6-7 of roundtrip. My initial interest of 5000 dollars the money of the game has grown to near 15,000 dollars from 1,19 when I began to do this in serious. One will not become rich doing this, but in the course of a year that is worth the pain an extra person of income for my family. If it is allowed to do nothing else that to pay to my house and bottom me for the future university for my three children whom the pain is worth. Now that I have demonstrated same that this seems to be a reasonable strategy that I am trying to understand what can do better and now I am in the zone of " I do not know what not it s

“Foolproof” option strategy: where is the risk?

September 12, 2010 by  
Filed under Option Trading

In the learning about the options of commerce in my virtual account, always I ask " In what conditions this position for losing money? " I am proving a strategy and I cannot find where it can go badly. Here it goes: The present price of SPY is more or less 90. I have created two one extends calendar OTM in SPY, one of sale and buys one, each 10 points of distance, with my longer side with the contract of September and my short side of the month next course. In only 3 months from the moved year 2000 there is SPY more than 10% in a single month, so I am very certainly I will not obtain successively exerted. (I would like to take measures to avoid this if the market began to move much anyway.) For the eyes of my beginner, to the July victory, the short ones will expire without value and my it yearns for will be on sale. Independent of the form in which the market moves, a value of contract to length will increase and a diminution of will, but the effects that are annulled to each other. For me, outside the little common case of a movement a month 10%, this looks like on approval of idiots, but to be an idiot I do not know that I must be losing something. Can somebody help me? Good, reason why the movement is better to buy and to sell of September of August, go 2 and 3 months of loss instead of 1 and 3? In the side since it receives 2. 15-1. 39 for a network. 76 of debit. Age of a month (supposing that there is no change) me 1. 39 & amp;. 43, or. 96 of credit to relax leaving with me. 22 aims of profit. By the call side that receives. 92 & amp;. 48 (net -. 44) and, next 1. 13/. 62 and, next. 62/. 11. That the zero networks, but when it is combined with the extension. 22 from since still they do. 22 in invested 1. 2, a gain of 18%. What you must learn better is what it happens with the prices as the underlying one towards one of them of the differentials. It is that to really compensate or it gain or loss will not depend on if sale or diffusion is a OTM?

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