Anyone successfully trade options intraday?

Question

Something I looked into, but the bid-ask spreads are immense! They were running about 7% for the upper-mid caps, and still hanging around 2% for Microsoft and Exxon. With commissions, these spreads are quite sizable, and for such short time periods, does any one successfully trade them intraday? Thanks for your help.

Market makers don't count. Arbitrageurs would, but is the market inefficient enough for the spread to be beat that quickly?

Answer 1

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Answer 2

You can do it on stocks with high volatility-- like Apple, Goldman Sachs, Freeport MacMoran, Lehman. But you need to be content with a $1-2.00 move. I find ones where the delta is close to dollar for dollar. ( In the money options)

I look for those where the delta is at least 50% of the stock move, or higher (at the money options). However, I am not adverse to holding them. This morning, I bought Chesapeake Energy ( it's a natural gas play) options at $7.30 a piece and they closed at $8.10. I didn't sell them, though. I'll hold for awhile.  Sometimes I do spreads, but not for one day.  Happy trading!

ps- you are with the wrong broker if you are worried about the commissions. The commissions shouldn't be formidable.

Hope this explanation helps.

pps- if the bid/ask spread is that far apart, that means the market is thin. You have to trade in markets with volume, especially if your goal is to dump it by the end of the day.

Answer 3

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