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Best market for Option Trading

Discussion in 'Derivatives' started by drewster, Feb 1, 2018.

  1. drewster

    drewster

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    I'm new and have done some research and it appears that the US market is the best to do Option Trading and for very valid reasons. I havent been able to make a trade yet so havent put it to the test yet.
    So my question is, does anyone option trade on the LSE or any other market which can give decent and consistent returns?

    Thanks,
    Drew
     
  2. Sharkman

    Sharkman

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    you need to decide what "best" means according to *your* criteria. what's best for me might not be best for you. in terms of liquidity, diversity and tight spreads then sure i would agree US is best. but in terms of timezone it certainly isn't.

    i trade ASX options despite the fact that they are rubbish in terms of liquidity, diversity and spreads. i've concluded they are best *for me* in my current situation because:

    - it's the market i'm most familiar with
    - i don't have to worry about hedging FX risk
    - i can trade thru IB with their excellent commissions without having to pay for IB market data because i also run a buy & hold portfolio thru a CHESS brokerage account which gives me live ASX option prices for free
    - i can trade it while i'm at work thanks to the timezone, effectively giving me two income streams for the same number of working hours (though admittedly i do miss opportunities as some days i'm too busy doing what i'm paid to do and can't watch the market)
    - i've based my strategy around the limitations - about 90% of my trades are either covered calls or cash covered puts, and for most of those i just let it run to expiry and deal with the assignment as needed, minimising commissions and number of spreads crossed

    lastly i would say that decent and consistent returns (as opposed to unpredictable but potentially spectacular returns) are more a function of the strategies employed, not so much the particular market that the trades are executed in. if you just keep going for the hail mary and buying truckloads of way OTM calls or puts month after month, you're going to get unpredictable but potentially spectacular returns no matter what market you trade in.
     
    cynic likes this.
  3. drewster

    drewster

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    Hey Sharkman,

    Thank you for you response and makes good sense to me. I guess I will need to play the game and figure it all out as I go along, because I fully agree that my best and your best won't always be the same.
    I would however like to know more about what and how you do. If you dont mind I'll PM you.

    Thanks again for the response it was very helpful to hear that there is someone who trades on the ASK :)
     
  4. Sharkman

    Sharkman

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    have replied, but i think you should post your questions here. mine isn't the only valid opinion, there are other people here who are also experienced in options trading, they might have thoughts on the subject as well.
     
  5. tradefloor

    tradefloor

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    I'll re-emphasise what Sharkman said - best market depends on a range of reason which are directly applicable to your personal circumstances.

    As I pointed out in a response here (reply #5), liquidity and spreads aren't a problem, however, it just looks that way because market-makers aren't obligated to show their quotes until you do a quote request or get a system like ours which gives you an accurate mid-point / theo.

    Aussie market also has European-styled options, which are fantastic if you want to sell spreads (sold ITM leg being European means you wont get assigned early).
     
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