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Re: OPTIONS Bid+Ask



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Marcelo Martinez wrote:
> 
> FAIRBANKS3 wrote:
> >
> > Hi...This info pertains to the Philly and the Amex..I don't know about the
> > CBOE....  The bid -ask is changed by the specialist in most cases with the
> > spread difference automatically put in by computer. This market can then be
> > tightened by a customer order or market makers who want to post a market.
> > Legging into a spread can be profitable if the market wiggles a bit so both
> > your sides get done at good prices.  More often then not, you just end up
> > paying up. At least ask for the market in your spread as a spread....as the
> > risk is less for the market makers ( and specialist) the price will be better
> > than the two outrights and may approach where you wanted to leg in anyway.
> > Good luck.
> 
> Thanks for the info.
> Thanks DOCTOR for the lengthy discussion. I guess I'm still digesting
> it.
> 
> How do you determine where the market is in a spread? If I ask my broker
> he'll just quote the natural spread (ask on buy minus bid on sell) but I
> know you can get a better price than this , but what price ?. I actually
> do want to take advantage of the short "wiggles" of the market to get a
> better price for the spread since it will increase profit potential and
> will reduce my risk once you are in. I started traking the bid-ask
> spreads and real trades real time to determine the market but I don't
> know how to interpret the numbers . Maybe I can post the results so
> someone can interpret them.
> 
> Marcelo


In Joe Ross's tapes on how to order commodities and options.  He says if
buying the option to put in your order one or two ticks above the ask..
and visa versa for the sell,

Norman Winski used to be a floor trader in options.. maybe he kNows...
:)

don