Spreads are definately bigger, however if studied closely, these bigger spreads can provide opportunities for jucier profits. Take advantage of the impanient and pocket the spread!
In the big liquid blue chips (big 4 banks, TLS, NCP, BHP, etc) there will always be a couple of series of options that are very liquid, with very large open interests. These options tend to trade quite frequently, with genuine buyers/sellers at most times. Most of these trade atleast a few times a day.
Redabyss, you asked a very pertinent question re why buy options when one can trade warrants (albeit at a more expensive entry & exit) for similar profits??
The reason, imho, is that derivatives are by their very nature instruments that often expire (even when one plans not to hold to expiry).
Would you rather be holding a 20c OTM warrant till expiry... or an option with equivalent characteristics that only cost 14c??
You could very easily mount a case that the warrant holder is less likely to be in such a position because they would be able to exit easlier in such a scenario.
In the end, i guess it all comes down to ones preferences.
I am by nature a cheapy. I don't like paying full price for anything! Warrants trade at full price + more, imho.
I also generally hate bankers/brokers. The thought of them profiting from my activities does not sit well with me, especially when there's a very viable alternative.