Automatic Spreads versus Manual

J

jjgallow

Apologies in advance, this question must have been asked 100 times before, but I'm not able to find a recent answer.

How reliable are automatic spread setups these days for getting a fair price in your spread setup?

Specifically, I'm thinking of IB's Combo Builder.

Any good? Or is too much lost in the trade?

10-15 years ago, when I did this more, the answer was mostly considered no. It was always better to set up your spreads (especially with 4 positions or more, such as butterflies) manually, one option at a time.

Thoughts appreciated
 
I prefer a simple option ticket that sends my order to the Complex Order book on the Option exchange or if you have access, the use of a broker to shop your order to other clients.
 
Prime Brokers in general, require AUM of at least $1M to do trades away from their systems (Some require more). After that, it is relationship based. If we provide the floor broker with enough volume from other clients, they will accept smaller orders. The smaller the order, the less time and effort they will use on it. The larger the order, the more interest from other traders. I can't give you a firm minimum.

The other alternative, if you can get access to it, is to route your order to an option dark pool. Request for Quote (RFQ) orders electronically are evaluated by option Market makers and other on their system. ConvergEx has one called NXP. See the PDF attached.
 

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