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> With QQQ at 42, the July 46 call (4 strikes out-of-the-money) has
> a B/A spread (slippage) of 1 tick,
But that 1 tick is the difference between $0.25 and $0.30 --
percentage-wise that's an ENORMOUS spread. If I scale that up to NQ-
equivalent prices, that's like having a b/a of 1545 / 1854 in the NQ!
Unless I've grossly misunderstood something, you're never going to
replace futures trading with a spread like that. If you're only
buying the call as insurance with no intentions of trying to make a
profit on it, that might be a lesser concern, but...
> The 38 calls (4 strikes deep in-the-money) show a market depth of
> more than 5000 on each side, with a B/A spread of only two ticks...
> Though the B/A spread [ on the July 32 call] has widened to 4 ticks...
Those spreads are much more reasonable -- 2.2% and 1.9% respectively.
But it's still almost 100x bigger than the typical 1-tick (0.5-
handle) spread in the NQ.
So even with the smaller 2% spreads, that's still the equivalent of a
35-handle cost in the NQ. I don't think you'd want to try to trade
the QQQ options in place of the futures, with costs like that. But
you said in a previous note that you COULD use the QQQ and OEX for
day trading of options. If you can make money with a 35-handle (or
worse) penalty, you're a better trader than I am.
What am I misunderstanding here?
Gary
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