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Investment Strategies / Mechanical Investing
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Author: rayvt 🐝  😊 😞
Number: of 3960 
Subject: Re: Buying Long Dated Calls
Date: 07/15/2024 5:45 PM
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The bids and ask you see are almost certainly from the computer of a market maker.
For the streaming real-time quotes I see at Schwab on an option I'm trying to trade, the bid & ask vary quite rapidly---much faster than a human would be able to do.

My guess is that the bid&ask sizes are essentially meaningless.

All this is just the the computer tracking the price movements of the underlying stock.

Whenever I make an order, I enter the entire number of contracts I want to trade. I start my limit price at the midpoint, which rarely gets a fill. Then every couple to minutes move my price 5 or 10 cents at a time until it does fill.
Problem is that sometimes the stock moves against me and the option trade runs away from me.

If I want to try for an immediate fill, I set my limit at 3/4 inside the spread. These generally fill right away.

Most of my option trades, there are no other trades in that position, and often mine is the only or one of the few open interest.
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