Lesson Overview

Tips On Getting Your Trades Filled

Order entry is the most important aspect of options trading and today I'll share 8 quick tips on how you can get your trades filled either faster or at better pricing. All of them are generally common sense but might help you enter trades more efficiently in the future.

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  • I think TD’s platform is by far superior to everyone else out there. Better data, better flexibility for writing code and indicators into the software and faster technology. It’s the best.

    • Alan Redlaw

      Any recommendation on the best non-US broker for options? thanks

  • I guess you could use the TOS software for indicators and then just place your trades through optionhouse for the cheaper commissions lol.

  • Thanks for the add Wyatt – yes I do not use market orders, just never find the routinely get in at good pricing. On odd lots I agree that you have to make sure your commission structure allows you to do it – that’s always assumed. I just find that often my random odd lots get filled faster – no clue why but it happens and it works.

  • Sam Winick

    Hey Kirk,

    I was just looking at the options for CAT (stock at $82) and the volume was at 17 for the 77.5 strike, but the open interest was over 10k. I’m just a little confused on how this works. Is it better to look at open interest for seeing how liquid that position is or is volume more important to the ability to get in and out??

    Thanks,

    • Volume is just for the current day so I would say in this case you are fine since the open interest is deep.

  • Ed Tom

    Hey Kirk, I use TOS. When I leg into an Iron condor, bought the call and put verticals separately, How do we get them married back as an iron condor? (To be properly displayed and closed accordingly/ easily.) Thanks in advance.

    • If you legged into them you just have to create a full iron condor order separately to close at one time.

  • Befou64

    Bonjour Kirk, Is TOS dedicated to us citizens only? Is there any regulation which prevent an european to open an account & have access to that platform? Thanks

Show Video Transcript +

In this video, I want to talk about some tips on getting your trades filled a little faster. For me, this whole concept of order entry, or placing trades, is the most important aspect of options training.

Enter the wrong position, the wrong strategy, or the wrong pricing, and no amount of adjusting or hedging will save. That's why we spend so much time here in track number two on entering the right trade and getting trades filled.

Today, I want to cover eight tips on how to get your trades filled, either faster or at better pricing than you are now. The first tip is patience.

The reason I put this first is I feel like a lot of people in this business, whether you get started or whether you're an experienced trader, always have a lack of patience. I do too. Patience is a hard thing to do.

You want to get trades in, you see good pricing, you want to have your order executed and filled. But sometimes, patience can be the most important thing.

What I've learned over the last eight years doing this is that there's another trade, or an opportunity, or a setup, or whatever. There's always going to be another chance to either get in or another trading opportunity. It's never worth forcing a trade into the market for the sake of trading.

Number two tries "Odd" lots. Instead of placing an order at, say, ten contracts, which is a round lot number, try nine contracts instead. We usually find that this works well. If you try placing ten contracts, try placing an order for nine contracts.

If that gets filled, place the other order for one more. Or place an order for four contracts, or six, or seven. Try something a little bit different than just say, one, or two, or five, or ten, or fifteen, et cetera. Try some of these odd lots.

Again, this is going to be a little bit different. One of the techniques that you can use, again, just trying this odd lot mentality. Again, just one little point here before I continue forward.

This is why, at least on my end, I prefer to work with a broker that charges me on a per contract basis instead of a per order basis. Everything that we do here at Option Alpha, or at least at my personal account, is on a per contract basis.

The commission would be the same, whether I did two orders of five contracts or five orders of one contract, it doesn't matter. That's just a little side note there. Number three is, try legging into a strategy.

For example, if you're training an iron condor, try entering each credit spread side independently. Enter the put credit spread side, and then try to enter the call credit spread side. I can tell you that this is not necessarily the preferred thing that you can do, it's just a strategy that you can use to fill orders.

I like to fill both sides at one time, but for example, with an iron condor, it can be a little hard to fill for individual options than all of the different pricing that has to match up, and all of the number of contracts with somebody else. It can work in some instances to try to fill each side independently.

I don't ever really prefer to do independent legs within that. I'll do a credit spread side, but I won't go out and do each leg. I won't ... Buy some calls, then go in and sell some calls, then go in and buy some puts, then sell some puts.

I won't do four particular orders, but I'll try to spread the trade out into its breakdown pieces, so credit spreads or debit spreads, something like that. Okay, try legging into a strategy.

Number four uses round number pricing. Now, this can work in both directions. Meaning that if you see a trade that's trading around a dollar fifty, try entering the order around one forty-nine, or one fifty-one.

Likewise, if you see a trade that's trading around one fifty-one, or one forty-nine, try entering the trade at one fifty. Try using some of that round lot pricing, or round number pricing. It might help get the trade filled a little faster.

Again, this can work in both directions; you just have to kind of play with it. I always try to kind of stretch the market a little bit. Number five is, know your "Mark." Never enter a trade at the bid or the asking price.

Know where the last trade was executed. We have training on this here at Option Alpha. You can just search the bid/ask spread, or the mark. But basically, what you want to do is make sure that you're trading first in really liquid underlying, which we talk about here on track two, and in track one.

But first, make sure you're trading liquid underlying, but then number two is making sure you know where the last market price, or last price it was trading.

For example, if you're looking at a stock and the bid and the ask spread was one fifteen to one twenty, that means that the last price may have been one sixteen or one seventeen, somewhere in between the bid and the ask spread.

Just know where that mark is, it will help reduce some of the slippages that you might otherwise have missed, enter in some trades.

Number six is, stretch the Market. I always try to offer, either above or below, depending on which way we're trading, the market prices, to see if there are there are any takers. Again, you don't know if there's anybody out there that's looking for that position at a different price.

For example, if we're getting into, let's say, a trade where we're selling options and taking in credit, I might try to offer a couple of pennies, or couple dollars above, where the market is trading at the moment.

If, let's say we're selling a strangle, and the strangle is priced at a hundred dollars, I might try to get that strangle in for a hundred and five, or a hundred and four dollars.

I'm not going to stretch wild prices like I'm not going to try to get it filled at a hundred and fifty when it's trading at a hundred, right? It's not going to happen.

But I will try to stretch just a little bit just to get maybe a couple of dollars out the market, see if there are any takers. Sometimes it works, sometimes it doesn't, but I always try to stretch.

That also means if we're going to buy options, so let's say we're going to buy a debit spread and it's trading at fifty dollars, I might try to buy that debit spread for forty-eight dollars, or for forty-seven dollars.

I'll try to stretch a little bit, try to offer a little bit less than what the market is. Maybe there's somebody who is willing to come down and meet me at that price and get the trade filled.

Number seven is, adjust slowly. It is okay to adjust prices to fill. I get this question a lot with our pro and elite members when people get started they say, "Well, I placed the order, and I don't know if it's okay to adjust or move my prices."

Yes, it's always okay to adjust your prices to fill. You just have to do it slowly and don't rush. Remember, order entry is real, really important. You want to make sure you're getting fair pricing, as we talked about before.

You want to make sure that you're getting decent pricing on spreads that correlate with the risk in the trade. Don't rush this process.

Usually what I do is I wait anywhere between ten and fifteen minutes. It's not a hard rule where I've got a timer for fifteen minutes. But I'll place an order, I'll let the market trade around that order.

I'll come back, and if it hasn't filled after fifteen minutes, I'll reassess the trade. Did the market move higher? Do I need to move my prices? Do I need to adjust my strike prices to maintain that probability of success that we are targeting?

I think you have to do it on a slow basis. If the market does move, and it can move pretty fast as we all know, then we want to make sure that you're still calculating everything out appropriately so that you know what exactly we're getting into. Again, don't rush, but it is okay to adjust, just do it slowly.

Number eight follows the volume. See where the volume is today, and look to possibly adjust your strike prices.

You know, I think this is a really key concept, but if you trade after the market opens, and you let some of the volumes come in, and let the market kind of work out for a little bit in the morning, and usually I do my trading somewhere around thirty minutes after the market opens.

I don't like to do a lot of trading when the market opens right away. Do I want to see where the volume is, where's the activity today?

If you look at a particular strike price, and you see that, let's say the one ten call options, have a couple of contracts that are traded, the one elevens have a couple, but then the one twelves have like five hundred contracts that were traded.

Well, that might be the place where people are focusing their attention, those one twelve call options. You might need to look at adjusting your strike prices. Maybe you were targeting the one tens or the one elevens.

Maybe you can take a little bit less money and target the one twelves, cause you might get filled quicker, and you might get filled at a better price, instead of waiting for somebody to fill out the one tens or the one elevens.

Always see where the volume is. You'll there are noticeable spikes in volume at particular strike prices. It's usually around, round or even lot strike prices. 85, 80, 75, et cetera. You'll never really see a lot of volume in those uneven strike prices, typically, across the board.

There may be some outliers there, but usually, if you have strike prices of a dollar wide, you'll see most of the volume at those five dollar increments, versus that dollar and a half increments, okay? That's another quick tip for how you can orders filled a little bit faster.

As always, hope you guys enjoyed these videos. If you have any comments or questions, please ask them right below. If you love this video, please share it online. Help spread the word about what we're trying to do here at Option Alpha. Until next time, happy trading.

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