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This is one strategy that may not require you to predict the correct Option.
In this case you skillfully submit both Buy and Sell Limit Orders for the
same Option at the same time. (The Buy Limit Order must be at a lower price than the
Sell Limit Order or the order will not be accepted since it could result in a self-trade.)
You are making a market in the Option since anyone else can now either buy or sell
the Option (at your price). (If there is no buy or sell orders open at any time then
we would say that there is effectively no market for that Option at that time.)
With this strategy you are banking on the fact that there will often be someone who
is selling an Option for some reason (perhaps to buy a different one).
So, every time you buy low and sell high
you earn income (the difference between the buy and sell price),
even if the average price of the Option does not change much.
With this strategy the skill comes from setting buy and sell prices that beat your
competition (other traders using a similar strategy) but also provide you with
a significant margin on each buy and sell.
It's possible that you'll need to be quite active in changing the price of your
open buy and sell orders to track changes in the market.
With this strategy it's possible that you won't hold the Shares until the Contract
closes. You might try to sell all Shares before that time after making your profit
during the lifetime of the Contract.
Most markets rely on Market Makers to ensure that a trading opportunity is always available
for other traders.
Cenimar will soon release some tools to formalize and simplify the role of
the Market Maker.
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