Trade Update

Trade Update

Hello Smart Option Sellers! Gap Inc. (GPS) We missed by a penny or two yesterday in terms of getting filled on the new GPS put-sell. At the end of trade yesterday, the put option had a market of $.28 bid/$.30 our offer. No one was willing to buy from us at $.30 per contract. I was hoping the market would open weaker this morning to give us a chance to get filled. No such luck, as GPS stock is now $1.25 per share higher this morning, which will put downward pressure on the put option prices (higher stock price = lower put option prices). As I say, I try to pick stocks which I feel are on the cusp of moving higher. I just want us to be able to get into the option trade before the stock makes that move. So for now, the trade stays open and we work it GTC (good-til-cancelled). Option Order Tactics Let's discuss order entry for a minute. With options markets, some strikes have real tight bid/ask spreads of maybe a penny or two wide, while others can have large spreads of anywhere from a nickel to thirty cents wide. I haven't really found a correlation between how liquid the stocks are versus how liquid the options are. GPS stock is a widely traded stock with large volume and its stock trades in a penny wide market. You would think that the options market would be just as tight and have large volume as well. Not the case. GPS options have ten to fifteen cent wide bid/ask spreads.