A case for SEC: How criminal Market Makers rob the traders

smallfil said:
Life is not fair. There are abuses and injustices happening everyday, everywhere in the US and elsewhere. It is what it is. So, the market maker is trying to low ball the seller which is at 2.45, bid is at 0.91. If you are trying to sell your option, what you should do is wait till the next day. The same market maker will sell the same options he bought at lower prices at the higher price that he can get for it. So now, the asked price could be at 3.50 especially if the stock is dropping in price by a lot. Say, the bid price now is 3.00 and ask is 3.50. You can now try and get out at 3.25. If the stock is dropping like a rock, just wait as the option prices goes even higher, say it goes to bid 4.00 and ask 4.50. If I was trying to get out, I would now hit the bid price of 4.00 and close out my trade. So, you have a problem, I give you the solution. No market maker can force you to sell at a price you do not wish to sell at. It is all under your complete control.
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@smallfil, can you show us an option pricing model that for this Put can give such a price that is above the strike of $2 ? Just to verify the said prices... You can even set the IV to 1000 or even 10,000, or to infinity - 1 ... :)
And: I was meaning the strike 2 in the first picture, ie. ticker VERU.
But above you used the strike 2 of the other ticker. But yes that one uses an illegal price as well.
Really, I would be ashamed to give such a justification, because it's... ups... ashaming...
Then maybe I'm having the wrong genes/culture/professional ethics/morale/life ethics or so... :-)
 
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earth_imperator said:
@smallfil, can you show us an option pricing model that for this Put can give such a price that is above the strike of $2 ? Just to verify the said prices... You can even set the IV to 1000 or even 10,000, or to infinity - 1 ... :)
And: I was meaning the strike 2 in the first picture, ie. ticker VERU.
But above you used the strike 2 of the other ticker. But yes that one uses an illegal price as well.
Really, I would be ashamed to give such a justification, because it's... ups... ashaming...
Then maybe I'm having the wrong genes/culture/professional ethics/morale/life ethics or so... :)
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You can look for an example yourself. Sorry, I already gave you solution to the problem. Huge waste of time and I am not wasting my time.
 
smallfil said:
You can look for an example yourself. Sorry, I already gave you solution to the problem. Huge waste of time and I am not wasting my time.
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You behave like a classic loser :)
The reason is: you can't give an answer b/c it's mathematically impossible to have a Put option with a premium > strike. Q.E.D.
 
smallfil said:
Be an adult and grow up. You act like a child throwing a tantrum. The example, you gave is yours. I merely, commented on it.
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I prefer exact answers to such problems, not your such wishi-washi "logic".
It's about some criminal MMs committing financial crimes, nothing less.
 
Option MMs generally run their own values. That is to them what fair value is. Then each exchange they are a member of has a quoting requirement. When I was on the AMEX, you need to stream a certain percent of the strikes with a minimum size of 10x10 and no more than $5.00 wide. On the active options, ATM and OTM in more liquid names with lots of option flow, to participate you need to be on at least the Bid or ASK or both. I might decide to bid/offer looking for $0.03 around fair value. Just an example. So, if an option is worth to me, $1.00, my system would send out a quote $0.97 x $1.03 10x10. On the other options, you make wider markets, so you do not get picked off. If a put on the $2 strike is worth $1.00, my system would generate a quote of 0.00 x 3.50. $2.50 above and below fair value. You can't quote a negative value. If that option became active, I would tighten my market. Otherwise, I have no expectation that any customer would send a market order to buy those options and pay $3.50, which would be $1.50 more than fair value if stock price became $0.00. This is just the way the systems are designed. You are free to place an option order at a better price than the MM if you expect a customer would come in as a buyer. But to say the MM is doing anything wrong, as long as they follow the exchange’s quoting requirements, is not a fair conclusion in my opinion. I also expect that if a customer were to buy at that price, it would not be broken under current option exchange Clearly Erroneous Trade rules, but each option exchange has their own policy.


earth_imperator said:
I prefer exact answers to such problems, not your such wishi-washi "logic".
It's about some criminal MMs committing financial crimes, nothing less.
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smallfil said:
Be an adult and grow up. You act like a child throwing a tantrum. The example, you gave is yours. I merely, commented on it.
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Tell our option expert that if a stock is trading at $2, and someone is asking $3 for a put, all one has to do is place an order to "sell to open" 1 put at $2. The ask will obviously drop, and the size of the ask won't be just one contract either... the machines will adjust in a millisecond and the ask size will be whatever... 150 contracts at $2.
:rolleyes:
 
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