Every time you route a market order on an option, you are handing money to the market maker before the trade even starts. A market order is legally held to neither time nor price, which means you have no protection on your fill. Tom Preston breaks down exactly what that costs you using a real options chain and shows why limit orders are the only way to maintain control of your executions.
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Chapters
0:00 Why market orders are dangerous in options
1:30 What held to neither time nor price actually means
2:30 GE options: the wide bid-ask spread example
4:00 How market makers exploit market orders
5:30 Limit orders give you control and price discovery
7:00 SPY example: even tight markets need limits
8:30 Spreads and iron condors: never use market order...