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Jim Schultz: The Bid-Ask Spread Is Quietly Costing You Real Money.
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ticker lesson
Breakdown
0:00lesson
Liquidity is key in options trading
- Options trading hinges on liquidity
- Focus on bid-ask spreads, not Greeks or volume
- Liquidity determines fair pricing access
1:37lesson
Bid-ask spreads cost retail traders
- Retail traders buy offers, sell bids
- Negotiating mid-price is disadvantageous
- Spread differential = hidden cost
3:20lesson
Monthly vs weekly options liquidity
- Top liquidity names (SPY, AAPL) have tight spreads
- Less liquid assets show wider monthly/weekly gaps
- Default to monthlies for regular trades
5:09SPY· ticker
SPY monthly options — tight spreads
- August monthly options show 5-6 cent spreads
- Mid-price fills common
- High liquidity enables price improvement
6:57IBM· ticker
IBM weekly options — widened spreads
- August weekly options show 70-75 cent spreads
- 70 cent put spread, 50 cent call spread
- Less liquid names show significant gaps
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