I generally use the Mid when placing a spread trade. But, if I am buying an individual option, I look at Market Depth and place my order just above the bid. For instance, I was closing a DIA trade today and the spread was $2.04 – 2.08. I placed a sell at $2.07 and changed the bid/ask spread. Most of the time, I get filled at my price. I might drop my ask later if I really want to get out.
Hi Sam. With TOS the best-practice is to set your limit order at the "mid" price. The TOS order screen shows you a price continuum with "mid" and "nat" (natural) price and a purple arrow showing where the price currently is. We always go for the "mid" price (which is half way between bid & ask) because it shaves a few cents which adds-up to real savings over time. Just cancel/replace with the new "mid" price if it moves. I usually wait about 5 mins to see if it fills before I cancel/replace. Now spreads and other combo orders sometimes take longer to fill because the market maker has to deal with them manually a lot of times. So if you have the flat $1.50/contract special commission rate for OptionClub members (email scott@thinkorswim.com to add it to your acct), then you don't really care about placing a vertical order (which saves on the ticket charge which we don't have), and you could place separate orders for each option. Those single option orders will get filled automatically by computer especially if you set your limit price at mid or 1 penny past mid price. Just make sure you fill the long option first, then the short option second so you don't go naked in your account. There is an advanced order called 1st triggers Sequential, where you can set the order for the long first, and then when that fills, it will fire off the second order for the short. Since you have no ticket charge, it's the same commission for you either way. So this is another secret to get quicker fills.
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