Option Selling Question: Getting Good Trade Execution

HI Allen,

I have been trying to trade since Wednesday.

 My orders never get filled at Mid. Do you set the limit below the mid?


Today with so little market movement you should have gotten
the mid or very close to it. Sometimes it depends on which underlying it is.
SPX is a little harder to get at the mid than others. So what i do is send the
trade as a limit order at the mid. It if doesn’t get filled right away I check
which way the market seems to be headed. if it is moving heavy in my
direction I wait, if not i resubmit the trade giving up a little. if the market
is not moving and i am not getting filled, i resubmit the trade giving up
a little. then a little more as long as my risk/reward looks acceptable.

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If I am getting into a trade I wait for a day or time when the underlying
is not moving in one direction. I want it just sitting there when i get in.
That’s when you get the best execution.
Sometimes I don’t get filled because i am not willing to give up any more.
For example, I have an aapl trade on right now. I have had an order to
buy back the spread at .05 for two days and have not gotten filled.
I could get it if i budged to .10 but don’t see the need to. I can wait
because the stock is so far away from my short strike.
On the other hand, if i saw another trade that i wanted to make
and needed the money, i would pay the .10 to close the aapl trade
and make the other trade.
Basically I send all my orders as Limit Orders. My broker’s software tells me what the Mid Price is so i don’t have to guess. I submit the order at the mid price first. Normally I will get filled within a couple minutes. Mostly it is instantaneous. if it is taking to long I will adjust the price and resend the order, making sure to cancel the original order first.

Option trading strategy 

Let’s use an example. Say I want to buy an option at 3.00. if I don’t get it right away at 3.00 i will increase it to maybe 3.02. if that doesn’t work then 3.04 or 3.05. If I am trading spreads then I do the same. A budge a couple pennies. With the SPX you have to do it in increments of 5 cents. So if you start at 1.00, you would increase it to 1.05, then 1.10. Increasing .10 on the SPX is the same as increasing .01 when trading SPY. Many people people SPY is better because you have .01 between the ask and the bid, but it normally works out to be the same.

Option selling execution

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