A paired option trade

A

arturo100

I am monitoring option activity on APPS. I was intrigued by the two following paired trades made on December 30 (I use iqfeed to monitor Times And Sales):

The first trade on APPS210115P00040000 was @ 0.12 with an open interest of 7114:
APPS2115M40 2020-12-30 14:32:08 0.12 5500 5850 0.15 0.2 66050209 C 16 20 52328

The first trade on APPS210219P00040000 was @ 1.52 with an open interest of 192:
APPS2119N40 2020-12-30 14:32:08 1.52 5500 5513 1.45 1.55 66050209 C 16 20 52328

The two orders have the same ticket ID (66050209). So I assume that they were combined. Also, it seems to me that the first order was closing a position and the second one was opening a new one, basically rolling up the previous position by one month. However, the reported price of the first transaction, 0.12, is way out the bid-ask range. Is it possible that the reported price is kind of average and the transaction was still a buy, i.e., nearer to the ask than to the bid? Also, in these cases, is legal to contact beforehands the market maker, that I assume is taking the other side of the trasaction, in order to define roughly what could be the terms of the trade?

Thanks in advance.
Arturo.
 
I just looked this up and it was tagged MLCT and traded on the ISE. This means it was a Multi Leg Cross Trade.
A MLCT trade, as defined by OPRA (Options Price Reporting Authority) is a "transaction that was the execution of an electronic multi leg order which was "stopped" at a price and traded in a two sided crossing mechanism that does not go through an exposure period."

So basically this trade was shopped around upstairs and then crossed.
 
Many thanks for taking the time to double check and posting your insights. Coming to my original question: is it still possible that the first one (the January one) was a trade on the ask and the second one was done on the bid? May be the problem is that I don't understand what does it mean to "shop around upstairs a trade and cross it"
Thanks again for your help and assistance.
 
arturo100 said:
Many thanks for taking the time to double check and posting your insights. Coming to my original question: is it still possible that the first one (the January one) was a trade on the ask and the second one was done on the bid? May be the problem is that I don't understand what does it mean to "shop around upstairs a trade and cross it"
Thanks again for your help and assistance.
More...
The trade would be looked at as a spread. So basically someone who wanted to do this trade would shop it around. They would call around and ask where can I buy/sell this spread. When they get a quote they are happy with, the trade is then crossed (meaning other traders can't participate).
 
You must log in or register to reply here.
Back
Top