Questions tagged [spreads]

A spread ca refer to one of: * the difference between the bid and the ask price of a security. * an options position established by purchasing one option and selling another option of the same class but of a different series. * The difference between a financial measurement relative to some benchmark (e.g. credit spreads, Z-spreads)

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124 views

Exiting a butterfly spread is hard

I have been watching webinars on butterfly spreads and in addition trading butterflies for about 6 months. Buying a butterfly is easy but exiting a position is rather hard. I have noticed even if my ...
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60 views

Choose between a Bull Call Spread and a Bull Put Spread?

I am looking into trading options with an eye towards something that I would eventually do as a business. For the purposes of this question, let's assume I am working with a modest portfolio, like $...
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35 views

When I buy a option spread with different calendar dates, should I close every leg manualy?

When I buy a option spread with different calendar dates (september, 10-17-24, october, 1), should I close every leg manualy or they will be closed automatically even if they expired ITM ?
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83 views

Do option spreads affect the holding period of the underlying stock?

Say I have 100 shares of ABC that are currently short-term. If I sell an ABC put credit spread and close either or both legs within 30 days, would it reset the holding period on the 100 shares of ...
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117 views

Should I consider the bid-ask spread as part of the transaction cost of a market order?

When I place a market order or marketable limit order that successfully executes, should I consider the bid-ask spread as part of the transaction cost of my order? The bid-ask spread is appears to be ...
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198 views

Failed Iron Condor while market price was under Short Call Spread

Symbol is: SPY. My short call spread was at $412, and market price was $410.50... I was 100% in returns until RH closed my call spread for a negative $5,688... I do not understand what I did wrong ...
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213 views

Riskless Principal - how does it work?

I've read the Investopedia article on Riskless Principal and my understanding is that a broker/dealer gets an order from a client of buy or sell a security at say 10. Then at the same time the broker ...
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42 views

Price lands between Spread Strike on Expiration

Imagine this setup: Sell put strike $10 Buy put strike $9 At expiration, the price is at 9.5 which should cause you to be assigned but your bought put won't execute. However, if you're doing this on ...
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55 views

In over-the-counter markets, shouldn't price takers attempt to match each other's prices?

From what I understand, a market maker buys at bid price and sells at ask price, whereas the price taker involved with the market maker buys at ask price and sells at bid price. Basically, the market ...
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63 views

Mechanism of sudden bid-ask spread changes

Bid and ask chart are sometimes very different in its shape, like this bid chart and ask chart (USD/JPY, @OANDA platform). At around 7:00AM on its ask chart, ask price ranges between 103.580 to 103....
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31 views

spx vertical bull put price selection

I just started trading SPX vertical bull put spreads. Had a few winners but am not sure about picking the right credit prices. It seems like system always recommends mid prices for opening or closing ...
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50 views

Waiting for Bid vs. Ask [duplicate]

Does a person make a profit when the bid price is higher than what was originally paid for the share? I know that you buy the ask, sell the bid, but if I ask to sell a share at a higher number than ...
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36 views

Spread calls in IRA retirement account and legal rules/regulations (USA)

I have an IRA account (USA) with Fidelity brokerage. I have an ability to do both Calendar and Vertical Spreads options in that particular retirement account. Are there any legal rules and regulations ...
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48 views

Explaining different risk/reward ratios of bull put spreads with same strikes but different expirations

I've been looking at call spreads and put spreads and observed some vastly different risk/reward ratios even when the same spread width is used. Can someone please explain these differences? All ...
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3k views

How is it possible that these deep ITM stock options on DISH went from 52,000 volume, 550 open bids, 550 open asks to being completely dead overnight?

I bought 16 years of historical hourly stock options data for my personal investment study to test how particular strategies may have played out over a long period of time. I'm looking at the data for ...
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458 views

What is causing large bid/ask spread in IEX top of book data?

I have been collecting data and experimenting with back testing algorithmic trading strategies. Admittedly I am not experienced in this domain and have been trying to build my understanding. I just ...
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876 views

What does it mean if the spread is temporarily shown to be 0?

In cryptocurrency/trading what does it mean if the spread is temporarily shown to be 0 (see diagram below)? There were no bids (or asks) on the order book at that time Market data was not available ...
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59 views

Bid ask spread and last price

Let us assume that the bid price is $10 the ask price is $20. We can only buy for $20 and only sell for $10. Does the current price have to be in the middle? IOW, does it have to be $15? Or can it ...
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4answers
493 views

How do market makers profit from the bid-ask spread when bids are almost always lower than asks?

I am familiar with how currency exchange booths at airports make some of their money: from the bid-ask spread. For example, they will say: "you can sell us 1 USD for 1.32 CAD, and you can buy 1 USD ...
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61 views

whats the difference between spread betting and day trading in shares?

please whats the difference between spread betting and day trading in shares? i understand in the UK, spread betting is tax free while day trading in the US markets from the UK will incur tax. For a ...
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90 views

what kind of exchange model is used in a typical large Stock Exchange?

So I have recently understood the meaning of a bid-ask spread and how market makers are involved in this process. However if I am not one of the lucky few 'members' of for instance the Amsterdam ...
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173 views

Sell the long on a debit spread to move it closer to the short?

I’ve been thinking about opening a wide bullish debit spread on SPY with a two month time to expiry. I’m currently looking at the March 20th calls and am thinking of selling the $425 call while ...
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381 views

Is a credit larger than the spread width bad in a credit spread?

I’ve been pondering this question since looking a put options for MCD today where I found two options for a credit spread that resulted in a credit $0.01 higher than the width of the spread. I was ...
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2answers
203 views

Understanding the visual representation of a Calendar Spread

The following plot and its context were taken from Hull`s Options, Futures and Other Derivative Securities (2002). I am slowly getting the basics of financial mathematics and came across this plot ...
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228 views

Clarification on definition of Negative Term Spread

I've been trying to educate myself on some financial terms and I've gotten into a point where I'm a little confused. Reading Understanding Term Spreads or Interest Rate Spreads I guess to understand ...
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107 views

Spread betting on UK house prices

There are articles online which discuss spread betting on house prices. However I have been unable to find companies that offer spreads on any of the well known UK house price indices. Given that ...
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5k views

Why are vertical option spreads level 3, requiring margin?

Why are vertical spreads (e.g., buying a call at one strike and selling a call at another strike, at the same expiration date) classified as "Level 3" options strategies, therefore requiring margin? ...
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169 views

Naked Put at Expiration

For most brokers, how naked put works at the expiration? Buy the option at that price, if ITM. Buy the underlying stocks if having enough cash in the account. For 2, does it depend on if the option ...
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3answers
353 views

Spreads on taker-maker exchange

Intuitively, I feel that, for a given stock traded on 2 exchanges with different price structure (i.e., exchange A is maker-taker, exchange B is taker-maker), the spread should be wider on exchange B (...
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202 views

Forex ask vs bid spread

There's something I don't understand about the bid vs ask price spread on fx markets: For example, assume the lowest ask price is 200, and the highest bid price is 100. So if I want to buy now I need ...
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118 views

What exactly happens during Forex transaction?

We are talking about Forex market. I want to figure out what exactly happens when I process a transaction on this market. Can you please correct me if I'm wrong: Assume we are working on EURUSD pair ...
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644 views

Why doesn't the bid/ask reflect my ask price on a spread options position I am trying to get rid of?

I entered this trade in about a week ago. It's always been under the ask but the ask never reflects my ask. Why?
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279 views

How should I interpret information about bond spreads that narrowed or widened the most?

How should I interpret information about bond spreads that narrowed or widened the most? I see this information in the financial pages in the newspaper, and have some ideas about what it means, but ...
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161 views

Calculate Plus 500 Spread payment

PLEASE ANSWER IF YOU ARE USING PLUS500 as platform so that it is easier to check at platform level. Please ask for more details in case you need before downvoting I am scratching my head around the ...
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3answers
4k views

Buy on bid sell on ask

Assuming that on some equities buy/sell price spread become more than x% in order books, which let's assume is more than exchange fees, does it make sense to to buy/sell and earn money on spread? Does ...
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5k views

How to determine if a bid-ask spread is "good" or "bad"?

Is it possible to weight the bid-ask spread? I'll explain ... In the moment, for a share X, to trade I use the price, volume, $ volume, # trades, % chg and the bid-ask spread (BAS). To make day ...
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1k views

Negative Bid-ask spread in an OTC market

I have a question about bid-ask spread in an over-the-counter market. I have these data: i Spread Midpoint Imbalance Ask Bid Total Ask Total bid 7 -1.378094 -0....
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647 views

Why divide by ask rate to get the spread?

I want to know why when we calculate the spread equation, that is the difference between ask rate and bid rate divided by ask rate, why can't we divide by bid rate?
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997 views

Backtesting daytrading strategy, how to handle the spread?

I am currently developing a daytrading application which based on rules and algorithms buys or sells stocks, which right now might buy/sell a stock in the magnitude of 100 per day. I am trying to ...
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2answers
311 views

Which spot Treasury bond is used to calculate this high-yield spread?

The link below shows the BofA Merrill Lynch US High Yield Option-Adjusted Spread. I am trying to have a better understanding of high-yield bonds before I invest in them. https://fred.stlouisfed.org/...
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1k views

How does a limit order work for a credit spread?

In the stock market, a limit order goes in the order book saying Someone is willing to buy 5 shares of this stock at $5. I understand the same would be true for an options order at a particular ...
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1k views

What do stock market index future bid/ask quotes mean?

I see bid and ask quotes for stock market index futures (e.g. the S&P500 mini future contract). However, I've just read from multiple sources that there is no cost to enter into a futures contract....
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2k views

What happens when the short leg of a credit put spread is assigned, but there is not enough liquidity to close the long leg?

My guess is that, if there is time left in the options the broker will wait, but if not, then the long put will expire worthless, and the trader will simply end up long the shares. If that's the case, ...
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4k views

What happens when a calendar spread is assigned in a non-margin account?

A well-known option investment strategy is the so-called "calendar spread", which involves buying and selling options on the same stock with different expiration dates. If the strike prices are also ...
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4answers
201 views

Value of a call option spread

In this example: An options trader believes that XYZ stock trading at $42 is going to rally soon and enters a bull call spread by buying a JUL 40 call for $300 and writing a JUL 45 call for $...
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5answers
6k views

Why buy a vertical spread if I could instead buy a naked call?

If I believe a stock will go up, say from a price of $100, and I wish to execute an options strategy that would make me money if the stock were to rise, why would I want to setup a vertical spread ...
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253 views

Ex-dividend dates for Nikkei and Dow Jones on CFD and Spread Bet Markets?

I've found a few ex-dividend date sites for the Dow Jones (can't find any decent ones for the Japanese Nikkei Index). However the ex-dividend dates don't seem to match when I get dividend payouts on ...
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58 views

Is there an online tool to help purchasing option spreads? [closed]

I'm pretty new to futures trading and I'm wondering if there is an online tool to help look at various spread options contracts? I'm interested in getting some experience trading futures with pretty ...
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288 views

New to options trading and need help understanding an options spread risk graph. What am I missing?

Suppose the stock is $41 at expiry. The graph says I will lose money. I think I paid $37.20 for (net debit) at this price. I would make money, not lose. What am I missing? Thanks for all your input, ...
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7k views

What does "compression of spreads on high-yield debt" mean?

What did Federal Reserve Chair Janet Yellen mean when she said the following? "We’ve also seen the compression of spreads on high-yield debt, which certainly looks like a reach for yield type of ...