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Short OTM options with a stop order?


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Short OTM options with a stop order?

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  #1 (permalink)
Singapore
 
Experience: Beginner
Platform: TDAmeritrade
Trading: Options On Futures
 
Posts: 38 since Aug 2017
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Hi folks,

Anybody here short far OTM options on futures with a stop loss order, like what is normally done by a futures day trader?

What's the pros and cons of such strategy?

Thank you very much



Best Regards
David

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  #2 (permalink)
Legendary Market Wizard
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Two obvious cons relate to the fact that options are not as liquid as futures, so a) a trade unrepresentative of the market could trigger your stop and b) the slippage on your stop could be high.

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sinpeople View Post
Hi folks,

Anybody here short far OTM options on futures with a stop loss order, like what is normally done by a futures day trader?

What's the pros and cons of such strategy?

Thank you very much



Best Regards
David

There are some tollerances, if they get breached no market order fill. Say you send a market order initial credit 1 USD, market fill 15 USD, CBOE will cancel the fill. Also Stops that don't trigger on bid but on trade can be deadly for your EV

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