Automated vs manual option trading...Does volume matter??

C

Cabin111

Say an Amazon options has 100 trades per day. While an XYZ trades 5 options per day.

Would the larger volume option be 99% automated? What about the hardly traded option? What percent would be auto vs manual?

Just wondering if you could provide proof of your answer...Thanks
 
I'll assume you are asking about the counter party to the order from the customer. If you send an order that is marketable (Market order, buy on the ask or sell on the bid) it will vary. Very liquid, active symbols might have a lot of limit orders on the book from customers in 50 delta and less options. Any order in the middle or DITM will most likely be filled by an automated trader, near 100%. My proof is that I was an automated option market maker.
 
Well would you not assume the 100 trades are smaller but more volume and the 5 larger but in the end if your risk management is correct and strategy stable these amounts should be the same?
 
An update on this trade. I had bought 200 share of PHO (a water EFT). I was trying to do a covered call (sell to open) yesterday Sept 22 $56. I was asking $1.80...After dropping my price over the day. I was the only one at $1.80...There were about 41 options bidding at about $1.50. No movement...Lightly traded option (I'm good till cancelled).

So the ETF jumps a little today (with the market). I look at the option (unfilled) at about 9:15 Pacific time (I have problems sleeping...Many of my trades are made toward the middle or end of the market day). I decide to drop my price (at Fidelity) to $1.75...Get some income for this thing. So I enter in the price...$1.75, send it in, and it gets filled right away.

The crazy thing is, I get a price improvement to $1.80!! The stock really hasn't moved much during these few minutes. So, what happened??
 
Cabin111 said:
An update on this trade. I had bought 200 share of PHO (a water EFT). I was trying to do a covered call (sell to open) yesterday Sept 22 $56. I was asking $1.80...After dropping my price over the day. I was the only one at $1.80...There were about 41 options bidding at about $1.50. No movement...Lightly traded option (I'm good till cancelled).

So the ETF jumps a little today (with the market). I look at the option (unfilled) at about 9:15 Pacific time (I have problems sleeping...Many of my trades are made toward the middle or end of the market day). I decide to drop my price (at Fidelity) to $1.75...Get some income for this thing. So I enter in the price...$1.75, send it in, and it gets filled right away.

The crazy thing is, I get a price improvement to $1.80!! The stock really hasn't moved much during these few minutes. So, what happened??
More...
https://www.elitetrader.com/et/threads/option-fill-price
 
Robert Morse said:
My proof is that I was an automated option market maker.
More...
Out of the curiosity from a retail: as an automated option market maker, what did you do throughout the trading day? Monitor the program and stop/restart it if needed?
 
Monitor news, risk, order flow for changes in my model. I was also able to do manual trading outside the 12 symbols I was registered with. I also did some pairs trading I.E. convertible A stock vs nonconvertible B stock and Warrants vs stock.
LM3886 said:
Out of the curiosity from a retail: as an automated option market maker, what did you do throughout the trading day? Monitor the program and stop/restart it if needed?
More...
 
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