Am I being ripped off by my broker?

I thought you were talking about end of day marks, not option pricing during trading hours. The options prices are the option prices and don't change from broker to broker. They are listed on the CME with an electronic auction market called Globex. Unless you buy a 1.00 delta options, it will never move $ for $ with the future.

Is that what you were asking about?
 
rmorse said:
I thought you were talking about end of day marks, not option pricing during trading hours. The options prices are the option prices and don't change from broker to broker. They are listed on the CME with an electronic auction market called Globex. Unless you buy a 1.00 delta options, it will never move $ for $ with the future.

Is that what you were asking about?
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I'm aware of Globex, I'm aware of CME , I'm aware that I can place trades on the market.

We're not talking about that.

What this thread is talking about is options appearing to move drastically in one direction whilst not moving drastically in the other direction as one would assume. Which was explained perfectly with the IV post..........


Now what I'm saying is that some Clearing companies OVER EXAGGERATE this IV...... all to their benefit of course. By quoting their "Clients" (cash cows) different to the market. And then pocketing the difference.
 
nxt7 said:
I had bought a weekly put option on the SPY that was failing for a good part of most of the week until today when it finally started to go In the Money. However the Bid price of the put is rising extremely slowly as the SPY decreases in like 0.5 increments, but it depreciates extremely quickly for just a 0.1 increase of the SPY. Are puts supposed to work this way or am I being ripped off by my broker? At this rate its unlikely I'll even breakeven. My put option's strike price was 208.5 and as of right now the underlying is at 208.36
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Only way to be sure is to ring CBOE and get a live quote when u enter and when u exit. in other words Audit ur broker.

I've read about the NFA handing out fines to clearing groups for not meeting their obligations.... which are "to provide a fair and orderly market".
 
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http://www.investopedia.com/terms/n/nbbo.asp

National Best Bid and Offer - NBBO

What is a 'National Best Bid and Offer - NBBO'
The best (lowest) available ask price and the best (highest) available bid price to investors when they buy and sell securities. National Best Bid and Offer is the bid and ask price the average person will see. The Securities and Exchange Commission’s Regulation NMS requires that brokers must guarantee customers this price.

BREAKING DOWN 'National Best Bid and Offer - NBBO'
The NBBO is updated throughout the day to show the highest and lowest offers for a security among all exchanges and market makers. The lowest ask price and the highest bid price displayed in the NBBO do not have to come from the same exchange. The best bid and ask prices from a single exchange or market maker are simply called “best bid and offer.”Traders who want to execute orders larger than those available through the NBBO will want to know the other potential bid and ask prices at which they could execute their orders. They can find these in an exchange or market maker’s “depth of book” data. Day traders usually use level 2 market-maker screens to see all the bids and offers for a particular stock.


 
http://options.about.com/od/Volatility/fl/Volatility-Crush.htm

Volatility Crush

The implied volatility of an option is not constant. It moves higher and lower for a variety of reasons. Most of the time the changes are gradual. However there are a few situations options change price in quantum leaps -- catching rookies traders by surprise.

  • When the market declines rapidly, implied volatility (IV) tends to increase rapidly. If there is aBlack Swan, or similar, event (market plunge), IV is likely to explode higher.
  • When the market gaps higher, especially after it had been moving lower, all fear of a bear market disappears and option premium undergoes a significant and immediate decline.
  • Once news is released (i.e, earnings are announced or the FDA issues a report), IV is often crushed. This is the topic for today's post.
 
rmorse said:
-Equity or equity option EOD marks are either based on EOD Best Bid/Best Offer midpoint or last sale depending on the broker.

Bob
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ironchef said:
My broker seemed to use last sale for EOD. Is that the norm?

Thanks.
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It's irrelevant and nothing to worry about --------- the P/L is unrealized at this point.



:)
 
nxt7 said:
I had bought a weekly put option on the SPY that was failing for a good part of most of the week until today when it finally started to go In the Money. However the Bid price of the put is rising extremely slowly as the SPY decreases in like 0.5 increments, but it depreciates extremely quickly for just a 0.1 increase of the SPY. Are puts supposed to work this way or am I being ripped off by my broker? At this rate its unlikely I'll even breakeven. My put option's strike price was 208.5 and as of right now the underlying is at 208.36
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  • Exactly what was the bid your broker was quoting?
  • I see that the high was $0.77 and the SPY low was at $207.91.
  • That's a generous $0.18 premium above intrinsic value with a few hours to expiration.



:)
 
ironchef said:
My broker seemed to use last sale for EOD. Is that the norm?

Thanks.
More...

Equities, options or futures? In general, I would say for equities=last sale, options=midpoint and futures=whatever the exchange procedure is.

Apex is the exception for options. They use last sale if within the NBBO. If last sale is below the bid, they use the bid. If last sale is above the offer, they use the offer.

Bob
 
CBC said:
My last trade was I entered a ES call for $5.0 and the ES jumped 10 points. I thought that my option should have at least gone to $9-$10 however the quotes / mid went to only $5.80..... 80cents??????? AFTER A 10 POINT MOVE IN THE ES???
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I don't think you understand options. You need to read up on delta for starters. Unless that's a really short dated option a 5$ call in a 50 delta instrument sure points to significantly OTM and hence low delta.

There's nothing amiss with FOPs and your broker has nothing to do with the best bid/ask in any chain.
 
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