No. of Recommendations: 0
I have also noticed, since I traded options in 98/99, that the bid/ask spread seems to be way out of line on some of the options. I don't remember it being like that. Why is it like that now a days?

I did not trade options before 2002, but from what I have read, heard and observed is that in before 2001-2002, then number of stocks that had underlying options was relatively low and compared to today where we have around 3,000 stocks with underlying options.

The same (or more) money is now spread over more options and therefore the volume/demand in individual options is lower (other than of highly traded stocks) and therefore the greater bid-ask spread.

The bid-ask spread is typically very small near the money options of highly traded stocks.


Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.