mytendies OP t1_iujz4te wrote on October 31, 2022 at 10:17 PM

Reply to comment by polloponzi in Most "Efficient" Options On The Market Today (How Should I Improve This? What Else You Guys Want to See?) by mytendies

you need to transact on liquid options to make money. Period.

if you try to buy an option for $100, but can only get a fill for $105 and then try to sell it 1 minute later for the $105 you paid, but can only get a fill for $95 then... you lost $10 in 1 minute getting in and out. That is 10%

What most people don't realize is that this bid ask spread robs them of a large portion of their profits and it amplifies their losses.

now if you look at my chart you can see the "efficiency" column and determine the most liquid, most easily transacted, tightest bid/ask spreads.

In my example above, if you have a highly efficient option, you might want to buy it for $100, get a fill for $100 and then be able to sell it for $100. That is highly liquid and easy to trade.

Those are the options you want to be playing with.

polloponzi t1_iuk2z8w wrote on October 31, 2022 at 10:47 PM

>you need to transact on liquid options to make money. Period.
>
>if you try to buy an option for $100, but can only get a fill for $105 and then try to sell it 1 minute later for the $105 you paid, but can only get a fill for $95 then... you lost $10 in 1 minute getting in and out. That is 10%
>
>What most people don't realize is that this bid ask spread robs them of a large portion of their profits and it amplifies their losses.

It seems to me you are looking to day-trade or swing-trade options.

I don't usually do that, I hold options for at least a week usually, so the bid-ask spreads don't really matter much to me.

When I want to day trade options I just trade the $SPX options that are by far the most efficient and liquid options you will be able to find. On top of that they are cash-settled so you can do all kind of spreads without worrying about pin risk or assignment. Check those.