Feb

28

 I started trading option spreads in SMH, which trade in pennies, and my initial opinion is that it is great for off-floor traders. In some equity options, I used to wait days on my limit because I didn't want to give up a whole nickel. Trading SMH, this is now unnecessary. Penny increments let me gradually give up two cents to get done. This is a huge savings.

For example, trading a 20-lot spread, my commissions are $40, but if I have to give up a nickel on a spread, it costs me an extra $100. If I give up only two cents, I save $60! Obviously, I also save money when I trade out of the position. My commissions are already as cheap as I could hope for, so narrowing the spread is far more beneficial than any further commission reduction. I'm inclined to increase my trading size.


Comments

WordPress database error: [Table './dailyspeculations_com_@002d_dailywordpress/wp_comments' is marked as crashed and last (automatic?) repair failed]
SELECT * FROM wp_comments WHERE comment_post_ID = '979' AND comment_approved = '1' ORDER BY comment_date

Name

Email

Website

Speak your mind

Archives

Resources & Links

Search