Question about commodity option bid and ask spread

Discussion in 'Stock picks and trading strategies' started by Textrader, Apr 30, 2010.

  1. Textrader

    Textrader New Member

    Hello, I am a new at selling options on commodities. I attempted to sell
    an out of the money option contract on heating oil and there was a wide spread between the posted bid and ask prices listed.
    How do I determine a proper asking price in that kind of situation? Just split the difference?

    I want to do a credit spread and am unsure how to determine pricing.

    Also, what should be my time frame when offering a contract for sale, should I let the offer expire at the end of the day and then reevaluate the market conditions daily?
     
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