Backing Away/Options Quotes

m1nt

m1nt

..So I put in an order to close out a cash-settled put position. My bid was higher by pennies than several transactions that took place over more than an hour. My order was never filled..

I believe this is "backing away" and designated market makers are obliged to honor my bid. I assume that option market makers have to adhere to firm quotes.

Is this correct?

Can I make a complaint at a regulatory agency or something beyond brokerage customer service (FINRA, SEC, etc.). In the grand scheme of things, not getting filled probably won't matter as the puts will probably expire worthless anyways.

Any constructive ideas?
 
Backing away only applies to an MM if they fail to meet the quoted bid and offer for a minimum quantity. What "minimum quantity" is probably has significant leeway.
 
gaussian said:
Backing away only applies to an MM if they fail to meet the quoted bid and offer for a minimum quantity. What "minimum quantity" is probably has significant leeway.
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That could be it considering it was 2 puts. Still, I'm surprised the sellers wouldn't want a little price improvement.
 
FSU said:
You are comparing prior trades to the asking price. You need to pay the offer, not pay a past trading price.
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My bid was between the bid and the ask. Several transactions happened at the market maker's bid. My bid, which was higher than the quoted real-time market maker's bid, was never hit. ???

The monetary value of the trade discrepancy is peanuts, but I would like to know if this is copacetic in the options world for future reference.
 
I see, so you are saying your bid was traded through. What was the product? What was the code in time and sales for the option trade that traded through your price? If you give me a bit more information, I can look that up for you (product, option series, time and date).
 
It was an OTM put in a stock trading under $5 with a June 19 expiry..

I already know know that it was traded through. I was sitting there in real-time. In addition, I have filed a grievance w/ FINRA.

Do you know anywhere else I can file? Yes, the trade is small potatoes, but knowing what to do in the future could be valuable.

So trading through is a no-no in the options world?

(I'll be out for the rest of the night. Thanks, board, for the interest..)
 
File with the listing exchange - Finra will just send it to the listing exchange and then check their progress at the audit. Generally every time I hear a story like this there is commonly a massive material omission.
OTM cash-settled from the OP then it's an equity? How about a clear statement of facts - is this option after some corporate action?
 
m1nt said:
My bid was between the bid and the ask. Several transactions happened at the market maker's bid. My bid, which was higher than the quoted real-time market maker's bid, was never hit. ???

The monetary value of the trade discrepancy is peanuts, but I would like to know if this is copacetic in the options world for future reference.
More...

If you want to close a position, unless the bid and ask prices is very wide, you should match the current bid price but, put in a limit order. That in effect makes it a market order but, with a limit order, you will not overpay. Placing an in between price will not work when the option prices are changing at a fast clip. That only works when there are few options orders on both the bid and ask side. Level 2 will show you how the prices on the bid and ask is lined up. You have to compete with market makers at times and if you have the same price, your order placed last on the queue.
 
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