Day Trading Options in Australia?

[Dominover]

I have some specific questions about day trading Option contracts on Australian companies. Wondering if anyone could answer the questions below.

Does anyone actually buy and sell options to profit from the change in Option premium value (in and out in 1 day) ?

If the option was bought 'in the money' and the stock price falls and the option becomes out of the money, you can still sell the reduced value 'out of the money's option at its new reduced premium can't you? (This is before expiry)
Or do you lose that option contract the minute it moves out of the money before expiry?

When trading ASX stock options, you pay the option premium and the brokers fee when you buy the contract. Is that correct? If so is the brokers fee more or less than buying the stock?

Thanks

 

[Sharkman]

IMHO that's not a viable way to trade options, at least on the ASX. in theory it sounds good because of the leverage, and if you trade them thru a serious broker like IB the brokerage is basically a non issue (they advertise 30c a contract, but i've actually been getting charged 17c a contract for the last couple of months or so, don't know why, posted this in the IB thread in case anyone else knows).

however you haven't considered one crucial factor - the bid/ask spread. check what the MMs are showing the market when it's in session - as a % of the option price, those spreads are going to be hideously wide. i just pulled up the BHP Apr monthlies (BHP being one of, if not the most liquid options on the ASX), the near ATM ($47) calls are showing 0.43/0.58. that's a humongous 15% both sides of the mid. maybe that's slightly exaggerated as it's early in the session at the moment and spreads tend to be a bit wider early on, but you usually aren't going to see stuff like 0.43/0.45 on ASX options.

you can often get filled near the mid, but that's not a guarantee, and speaking from personal experience, at times it feels as though the more badly i want a fill, the more the MMs go into scrooge mode and make me cross more of that spread to get it. which may very well be by design, the MMs most likely have algorithms that will hone in on which contracts traders are desperate to close out and when, and the bot then goes full scrooge mode and refuses to let you have it near the mid on those contracts.

that approach might work in the US, i don't know as i don't trade US options, but if you try it in the ASX, my guess is that you will soon start leaking capital due to constantly crossing massive spreads, and eventually arrive at the same conclusion.

 

[Investoradam]

The ASX isn’t very liquid and probably wouldn’t be great for day trading options.

the USA based exchanges is where it’s at and brokers like IB the brokerage is next to nothing