NDX

T

TomM

New member
Anyone ever have any luck trading NDX 7DTE? I know SPX is norm for several reasons and I get it. Just wondered If anyone regularly trades NDX and if its tough to get filled, especially on wide spreads and BF's?
 
I traded it briefly a few years ago not 7 DTE but from what I remember it was difficult to get filled on DITM spreads the bid/ask is ridiculously wide

Looking at a 7 DTE trade now the bid /ask is about 10 wide ATM with just 11 open interest
 
I have traded the NDX (mostly 2-6 weeks to expiration), the only ones i have done at 7 DTE are an occasional calendar. The bid ask spread is typically at least 4 times that of the SPX, due to the larger size of the NDX and the lower liquidity. Lot of my trades did get filled close to mid price, but the ones which didnt , i had to increase/ decrease the butterfly spread by 25 cents (again tends to be 4-5 times that of the SPX for similar reasons). I found it better to trade than the RUT, due to the lower commissions.

SPX is still my preferred instrument, but do use the NDX due to the higher implied volatility of the instrument. if the VIX goes any lower, may have to do more NDX trades. I have stopped trading the RUT almost completely.
 
As part of my Deep Dive Butterfly class - we dug into the various underlyings that a person could consider trading and in my research i found the massively wide Bid/Ask spread in NDX to be essentially untradeable (see image below). Keep in mind that this does not mean that you might not get an OK fill in both entry and exit - BUT if/when the markets move fast and hard against you and you either need to adjust or get out - I personally feel this could be a VERY BIG PROBLEM, so just give that some serious thought when looking at NDX specifically:
 

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@Steve G Steve, are these $ 20 spreads for at the money options ? are they for the monthlies or for the weeklies ? The bid ask spread is definitely higher than the RUT because the NDX is 6.5 times the size of the RUT.

The volume of options traded is very similar for NDX versus RUT https://optioncharts.io/trending/most-active-index-options. However, the NDX is about 6.5 times the size of the RUT, thus the notional value of NDX options which is being traded is much higher than the RUT.

Both the NDX/RUT pale in comparison to the SPX because of the sheer liquidity of the SPX.
 
srk said:
@Steve G Steve, are these $ 20 spreads for at the money options ? are they for the monthlies or for the weeklies ? The bid ask spread is definitely higher than the RUT because the NDX is 6.5 times the size of the RUT.

The volume of options traded is very similar for NDX versus RUT https://optioncharts.io/trending/most-active-index-options. However, the NDX is about 6.5 times the size of the RUT, thus the notional value of NDX options which is being traded is much higher than the RUT.

Both the NDX/RUT pale in comparison to the SPX because of the sheer liquidity of the SPX.
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Great question and I should have clarified that as it is out of context if you were not in the class. In my case I was comparing 45 day out 60/50 BWB's. in SPX to 125/100 BWB's in NDX (Which I know is not a direct correlation but to check Bid/Ask spreads it was fine), but the Bid Asks scared the heck out of me. In full disclosure - I have only traded NDX a few times and it was not in a crazy market, so I do not have specific data to back up my assumptions - but did want to share my observations.
 
I agree with the bid ask spread being wide in NDX and making it hard to trade getting filled is not too bad as you can place your trade and basically the market has to come against you to get it filled getting out is a different scenario because when the market is going against you , you don't have the luxury to wait so you will overpay just to get out or get out with a much smaller profit than TOS is showing on the analyze tab

Rut is not too bad but it's not as good as it used to be when it was half the price back around 2016 one small advantage in RUT is that it has penny increments so you only need to increase your price by a few pennies compared to SPX where you increase by 5-10 cents or more to get a fill
 
status1 said:
I agree with the bid ask spread being wide in NDX and making it hard to trade getting filled is not too bad as you can place your trade and basically the market has to come against you to get it filled getting out is a different scenario because when the market is going against you , you don't have the luxury to wait so you will overpay just to get out or get out with a much smaller profit than TOS is showing on the analyze tab

Rut is not too bad but it's not as good as it used to be when it was half the price back around 2016 one small advantage in RUT is that it has penny increments so you only need to increase your price by a few pennies compared to SPX where you increase by 5-10 cents or more to get a fill
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Great observation on the >01 increments in RUT.
 
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