Why does an alert say "trade the stock" with no options play?

Question

Accepted Answer

That stock's options were trading too wide at the signal: the at-the-money call's bid to ask was more than 10% of its middle price. A spread that wide eats the trade, so that call has no options play. At the close of the day a call fires, we check the at-the-money call about 60 days out. If the gap between its bid and ask is more than 10% of its middle price, there is no options play on that call. The alert says "No options play on this one: its options trade too wide. Trade the stock," and its card on your page says the same. What to do Trade the stock: the same entry, the stop 10% under it, the target 5% over it, out at the close on day 30 (the exits). Why we skip it With a wide spread you pay the ask going in and get the bid coming out. On a trade that aims for +5% on the stock, that difference can be most of the move.