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If you are using options as a stop you don't need to be delta aware. You just have
to define the risk. If the call/put is at the money it is the cost of the option
plus or minus the amount above or below the strike price. Deltas are only
applicable if you intend to trade the options and the futures in a specific
strategy. Ira.
swp wrote:
> So what kind of order do all you folks use? IF it is a limit order, away
> from the market, you probably will get filled at the wide bid/ask spread
> anyway. The only way to really avoid that, I've often found, is to get a
> bid/ask when the market is quiet and then try getting a price towards
> the middle of that range on an immediate or FOK (fill or kill) basis.
>
> The great prob I've found with using options for stops is just as what
> everybody is alluding to: The spreads are much wider than the futures.
> And remember, for a proper hedge, it needs to be delta weighted, so you
> need to buy/sell more options contracts than futures, making your
> brokerage higher too.
>
> Steve Poser
> --
> Steven W. Poser, President
> Poser Global Market Strategies Inc.
> http://www.poserglobal.com
>
> BrentinUtahsDixie wrote:
> >
> > Yikes! I'm with the DR about using MOC orders you're going to get a fill at
> > "their" greatest pleasure. Whether that is better or worse than an ATM order
> > during the session I'm not sure but either way you're playing into "their"
> > hands. I've heard tales of actual jubilance as an ATM option order comes
> > into the pit and is sort of tossed around like a basketball would be in a
> > ball game. The only time I've used the order is when I'm trying to rescue
> > some of the value of an expiring option or in a fast market.
> >
> > Brent
> > -----Original Message-----
> > From: Mervin Yeung <tinyeung@xxxxxxxx>
> > To: Real Traders <realtraders@xxxxxxxxxxxx>
> > Date: Monday, June 21, 1999 4:18 PM
> > Subject: OPTN: Market on Close
> >
> > >Hi RTs,
> > >
> > >I am trying to use options to replace stops. I worry about the
> > >liquidity. I know the close is usually the most liquid of the day. I
> > >wonder if I use Market on Close Order to buy calls or puts right at the
> > >close, is it a good way?
> > >
> > >Thanks in advance!
> > >
> > >Mervin
> > >
>
> Email: swp@xxxxxxxxxxxxxxx
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