No. of Recommendations: 6
What if there have been no option trades at your given strike price in some time?
What if? It doesn't matter. Options are not stocks, it's just people betting against one another.
as long as there is some bid and ask volume, the bid and ask should be meaningful and you go off of those?
Volume does not matter. At least, not in the small quantities we are trading.
Could you potentially offer a price outside the spread?
Sure. But it won't fill.
It's a computer program, with parameters on what trades it will accept. The bid & ask are really "We hope some naif will bite at that price." Or "Fishing for a yokel to make a market order."
You can almost always get a price inside the spread. Sometimes at the mid, often 3/4 of the spread.
The whole premise is that the underlying is going to recover, at least somewhat, which is if course a big risk.
That's gambling. Which most small option traders do because they are hoping to hit a lottery ticket.*
I'd suggest you read some of Jim's posts on buying deep ITM LEAP calls on stocks like BRK.B. Or just reading up on DITM LEAPs as a strategy.
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* I recently stumbled on a category of youtube videos on newbie investors trying to strike it rich with options at Robinhood. Most lose their entire account. All $1000.
