Trading 0dte's I bought a 6,710 SPX/SPXW call at 9:36. IV was around 25-30% at the time.
The price ebbs and flows as normal, the greeks moving minimally. Around 10:10, the price of SPX is down but my contract is moving up (according to robinhood). So, I take a look at the IV and see it has risen to 35% or so, so i assume thats the reason for the rise despite the price moving against me. I see the price of the contract at 14 so I say let me set a stop because although I'm still bullish on SPX today, i want to protect some of my "gains" at 12 or so.
The stop triggers instantly and im like WTH? the price is STILL showing at 13.5-14. Now before you think im crazy after you check the actual price of the contract (i realized this too when checking webull price action of the contract) or think i was on the wrong contract, ROBINHOOD WONT ALLOW STOPS OVER THE PRICE.
Can someone help me see wtf is happening/ happened.
And before you say "dont use robinhood" – I dont use them as a main broker, but they are for my yolo plays, (should be) quick easy day trades..
Or "you deserve it for trading 0dte's – you're probably right, but still, screw you. I like to practice my TA using live money.
TLDR: Bought contract for 10, price on RH showed 14, put stop market at 12, triggered for 6(the actual going price). Issue is RH showed 14. Is it my responsibility to check 3 brokers prices to ensure accurate pricing??
Someone please explain this to me
byu/MakeMoneyWithOptions inoptions
Posted by MakeMoneyWithOptions
4 Comments
Don’t use stops on options! It converted to a market order and you get screwed.
If you woulda been happy selling the contract at $12 then enter a limit order at that price.
The screenshot provided by you shows that the $12 trigger price was activated and that the position traded and was closed at $6 so going from a $12 trigger to a $6 fill clearly shows that it turned into a market order.
With options due to the low liquidity the market makers can, and do, change the bids and ask quite a lot, and when there is an order on the books such as your stop order they just kept changing the bid and ask to trigger it and then to fill it.
As to me I never used stop orders on options, and I never would use a market order for options that is just pure lunacy.
What I would do is set an alert to tell me if conditions are changing to where I needed to evaluate it to see if the position needed to be closed if it had not already reached my target price. And by having an order in the system at a target price I could quickly change the limit price of that order and resubmit it for the current market conditions.
Using your SPX order as an example, I would put in a sell to close order for say $25. That would give the position a nice profit if it took off like a rocket. Then I would set an alert on SPX how many ever points below the current price to let me know that the position is not going the way it is supposed to and that I need to reevaluate the position and determine if I need to bail out.
If that alert is triggered then I would look at the current mid price for that strike and adjust my order accordingly to try to get it to fill.
And sometimes if the price is going against you then you will have to enter the sell price much closer to the bid price to entice a buyer to take it off your hands.
Don’t use stops on 0dte options.. You can be +200% one minute -90% the next. Close when you want to exit or… Let it ride baby..
What time zone?
Difficult, if not impossible, to cross check the contract’s chart if you don’t mention your timezone.