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Trading the Open

Discussion in 'Options' started by AKJ, May 13, 2016.

  1. AKJ

    AKJ Well-Known Member

    I often hear advice from Options experts that it's best not to trade the first 30mins to 1 hour of the trading day because the price discovery process is very much in flux and you may end up getting poor fills on your orders. As a general rule of thumb, I think this is great advice for almost all options traders.

    However, the flip-side of this is the potential to find great discounts/premiums in the options market if you have a strong sense of what a good or bad price is. I'm wondering if any experienced traders in this community opportunistically try to trade the open? If some traders are getting fleeced by trading the open, then there may be opportunities to be on the other side of those trades. I can think of quite of few instances where I am tracking a trade over the course of a few days and have a good sense of what the fair pricing is; does it hurt to put in an order at the open to try to get a fill at a better price? Maybe you don't get filled, but I often see the mid-price swing all over the place in the first 30mins and there's always a chance.

    Thanks,
     
  2. DGH

    DGH Administrator

    Hi Andrew. You are correct in assuming that it is sometimes possible to get an excellent fill in the first 30 minutes, even right at the open. So, having an order at the open or a GTC order at a pre-determined good price (for you) is fine. The same is true for the 15 minutes following the 4:00 PM EST "close". The assumption is that a market maker either sees value in your order or needs to square his/her inventory. As you indicated, it is important to track the pricing, at least for a day or two, so that you know the price you want.
     
  3. AmyM

    AmyM New Member

    Hi Andrew. I agree and find that I am able to get more premium in the first 15-30 minutes of the trading day and will try to take advantage of that. For purchasing an adjustment I do like to wait if I can or put in a limit order with a price I'm willing to pay.
     
    SnakEyez likes this.

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