Secret 68THE SECRET COSTS OF OPTION SPREADS BEWARE OF SLIPPAGE!
К оглавлению1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1617 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33
34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67
68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101
102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118
119 120 121 122 123 124 125 126 127 128
One of my major rules of successful option trading is to
minimize your trading. There are high costs to option trading.
Not only are there commissions, but also there is slippage—the
distance between the bid and asked price. And that slippage can
be quite large, sometimes a large percentage of the option price.
That is a real cost.
Hence, when you trade spreads, you magnify that cost. Just
a simple spread will usually involve four trades—two trades to
get in and two trades to get out. Add to this the complexity and
difficulty of getting in and out of spreads, and you can see the
challenge you face. Such obstacles mean only one thing when
you are spreading: keep it simple!
BEWARE OF ALLIGATOR SPREADS FOR THE COMMISSIONS
AND SLIPPAGE CAN EAT YOU ALIVE!
One of my major rules of successful option trading is to
minimize your trading. There are high costs to option trading.
Not only are there commissions, but also there is slippage—the
distance between the bid and asked price. And that slippage can
be quite large, sometimes a large percentage of the option price.
That is a real cost.
Hence, when you trade spreads, you magnify that cost. Just
a simple spread will usually involve four trades—two trades to
get in and two trades to get out. Add to this the complexity and
difficulty of getting in and out of spreads, and you can see the
challenge you face. Such obstacles mean only one thing when
you are spreading: keep it simple!
BEWARE OF ALLIGATOR SPREADS FOR THE COMMISSIONS
AND SLIPPAGE CAN EAT YOU ALIVE!