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My sincere thanks to the people who suggested I take a look at the QQQ to
improve the Bid Ask Spread I had concern over in the OEX Options.
I have taken a look and the volume is in fact huge, but I am a bit confused
about the
relative size and hope I am doing something wrong.
First some of my assumptions:
The Nasdaq moves about 150% of the percent of the OEX.
The QQQ is 2% of the Nasdaq.
At the current close of the QQQ of 38.67 a QQQ option contract would = $3867
of Nas Stock.
At the current close of the OEX of 589.94 a OEX option contract would =
$58994 of S&P100 Stock.
A 1% change in the OEX would = about $600 in one OEX option.
A 1% change in the OEX would = about $60 in one QQQ option (1% x 150% = 1.5%
Nas)
A typical OEX near the money option might be Bid 6.00 and ask 6.50
A typical QQQ near the money option might be Bid 0.60 and ask 0.65
It would take approximately 10 QQQ to equal 1 OEX?
The spread between the bid ask is about the same percentage so I would not
gain anything?
The big possible advantage might be that the liquidity would provide someone
to buy my
stop in a fast moving market?
A single tick move of $0.05 is actually 5 times larger than a $0.10 tick on
an OEX option?
Just want to make sure before I place and order for a 100 contracts and find
out I missed a
decimal place or two. If I have my math right, this small contract size
makes the commission
a large percentage of any transaction.
Thanks in advance for your comments.
Kindest regards,
Paul
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