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Hi,
Instead of futures I trade index options, such as the
OEX, DJX, and QQQ. One advantage is skirting the new
stupid daytrading rules on small accounts. The main
issues with daytrading options is the loss due to the
bid-ask spread, which is (ask-bid)/ask. The at the
money <$3 QQQ options seem to have the best spread, at
an average of about ~$0.07/$2.5=2.8%. But I am no
expert and was wondering what other ways of trading
the market directions there might be.
If it weren't for the stupid "we will keep spreads at
a nickel if market makers bribe us enough" SEC, the
average spread would be even smaller, but the @ the
money QQQ spreads are tolerable as is. Now due to
other stupidity the DJX and OEX options have a CBOE
monopoly, so the spreads seem pretty fat there,
~$0.2/$2.5=8%. Is this right? If so, this is more
than twice as worse as the QQQs.
Does anyone have any suggestions for good options to
trade besides the QQQ options? Also, in placing limit
orders to get between the bid and ask, a key is
knowing which exchange and contract has the most
volume. Is CBOE, AMEX, or ISI #1 on the QQQs? Also,
are the OEX options normally traded at the money? If
so, most people trade ~$10 OEX options? It seems
there is a huge range of activity from $3 to $15
contracts. What other index-correlated options have
low spreads? Surely I am ignorant and you other
option folks are trading something better than options
of a trust.
Jack
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