#OptionsPro
We did indeed get filled unnecessarily on Apple 148 Puts today, which we have now turned into a spread. While this doesn’t happen often, it’s worth mentioning when it does. Looking at the following prices:
OCT. 27/17 AAPL PUT OPTIONS:
Strike Prices:
147
148 - Where we had trades.
149
If we set the benchmark high based on 9/29 prices:
147 - High 1.70 and the highest it has traded since that time = 1.25
148 - High 1.85 and the highest it has traded since that time = 2.16 (problem)
149 - High 2.40 and the highest it has traded since that time = 1.80
Since that time, the only strike price to violate or even come close to those price highs was the 148, which we were involved in, and was initially used as a hedge. This doesn’t happen often, but it did this time.
There was a blatant inefficiency in the market, but the fills were still correct. You can see out of our market sample that the option chains we chose were the only ones that acted strangely. This is the cost of doing business as a trader, you must roll with the punches and proceed forward. This was simply a random draw.
Apple has now been turned into a spread until the end of October. We will hedge the position now overweight 75% cash and underweight 25% another option chain along with Nasdaq futures as is the usual procedure.
Sorry for the inconvenience.
