looking to trade a option spread with expiration a least a month after april. what is the best trade. what should be my bid
which one should i buy based on risk vs reward
i only want to risk $1000
i want to buy the 2.5 strike and sell the 5, 7.5 10 12.5 or 15
also the spreads from each month trade at different prices what is the best one to put a bid in that will get executed
<<<what is the best trade.>>>
the one that you understand the best and where the implied volatility is furthest away from your projection of future volatility.
<<<what should be my bid>>>
Probably a penny or two above the difference in the theoretical prices of the two options.
<<<which one should i buy based on risk vs reward>>>
That depends upon your risk-reward profile. Everybody’s is different.
<<<the spreads from each month trade at different prices what is the best one to put a bid in that will get executed>>>
Nearer months are more liquid than more distant months, so the nearer the month the better your chance of having the order filled.
—–
There are no magic rules saying doing this is always better than doing that. If there were, the market would quickly adjust to make this more expensive and/or that less expensive.
If you want to have a good chance of being a profitable option trader you need to learn about options, about implied volatility and about the risk factors, sometimes called the "greeks". These are things you will probably have to read a book to learn. My favorite book on the subject is "Option Volatility & Pricing" by Sheldon Natenberg, but you should scan it before deciding if it is a good book for you.
I would not be trading options if you have more questions than answers.
Options Education
http://www.optionseducation.org/
References :
— Professional Options Trader, fmr Registered Options Principle
<<<what is the best trade.>>>
the one that you understand the best and where the implied volatility is furthest away from your projection of future volatility.
<<<what should be my bid>>>
Probably a penny or two above the difference in the theoretical prices of the two options.
<<<which one should i buy based on risk vs reward>>>
That depends upon your risk-reward profile. Everybody’s is different.
<<<the spreads from each month trade at different prices what is the best one to put a bid in that will get executed>>>
Nearer months are more liquid than more distant months, so the nearer the month the better your chance of having the order filled.
—–
There are no magic rules saying doing this is always better than doing that. If there were, the market would quickly adjust to make this more expensive and/or that less expensive.
If you want to have a good chance of being a profitable option trader you need to learn about options, about implied volatility and about the risk factors, sometimes called the "greeks". These are things you will probably have to read a book to learn. My favorite book on the subject is "Option Volatility & Pricing" by Sheldon Natenberg, but you should scan it before deciding if it is a good book for you.
References :