Execution of butterfly spreads

[Adam777]

This question is regarding the execution of 2 exchange traded calendars combined to make a fly. When you submit the fly to the broker with a limit order, the first side enters on a limit order and the second side enters on a market order.

Does this mean I automatically lose 1 tick entering the fly with a limit order? And if I enter the fly with a market order do I automatically lose 2 ticks (both sides using market orders)? How does it work?

I've also been watching clips of STIRS spread traders working all the legs to get a better price and I wanted to understand it a little better.

 

[2rosy]

This question is regarding the execution of 2 exchange traded calendars combined to make a fly. When you submit the fly to the broker with a limit order, the first side enters on a limit order and the second side enters on a market order.

Does this mean I automatically lose 1 tick entering the fly with a limit order? And if I enter the fly with a market order do I automatically lose 2 ticks (both sides using market orders)? How does it work?

when you submit with a limit it is not true that the first side is limit and the second market. Always use limit and why would you care how each leg is executed?

 

[Robert Morse]

This question is regarding the execution of 2 exchange traded calendars combined to make a fly. When you submit the fly to the broker with a limit order, the first side enters on a limit order and the second side enters on a market order.

Does this mean I automatically lose 1 tick entering the fly with a limit order? And if I enter the fly with a market order do I automatically lose 2 ticks (both sides using market orders)? How does it work?

Adam,

Options on Futures or options on equities?

Why not enter one spread and not be open to missing the second leg?

Can you provide a specific example?

 

[Martinghoul]

This question is regarding the execution of 2 exchange traded calendars combined to make a fly. When you submit the fly to the broker with a limit order, the first side enters on a limit order and the second side enters on a market order.

Does this mean I automatically lose 1 tick entering the fly with a limit order? And if I enter the fly with a market order do I automatically lose 2 ticks (both sides using market orders)? How does it work?

I've also been watching clips of STIRS spread traders working all the legs to get a better price and I wanted to understand it a little better.

There is a lot of variations and possibilities in these. At least in STIRS, where I have played with a variety of options.

However, a lot will depend on your broker, the execution machine and the particular exchange algo. Are you able to submit the fly order directly or does the exchange not list flies?

 

[Adam777]

Adam,

Options on Futures or options on equities?

Why not enter one spread and not be open to missing the second leg?

Can you provide a specific example?

Futures

3-Month Sterling: (L1-L2)-(L2-L3)

when you submit with a limit it is not true that the first side is limit and the second market. Always use limit and why would you care how each leg is executed?

I want to see if an idea is viable, and I can only do that if I understand how things work and how much it will cost to put it on

 

[Robert Morse]

Why not enter B1/S2/B1 as one trade? these are options vs just futures?

 

[Adam777]

There is a lot of variations and possibilities in these. At least in STIRS, where I have played with a variety of options.

However, a lot will depend on your broker, the execution machine and the particular exchange algo. Are you able to submit the fly order directly or does the exchange not list flies?

I'm really new to this as I want to start with something slow. I'm doing some research with ICE Europe and I'm looking at using TT Standard

 

[Adam777]

Why not enter B1/S2/B1 as one trade? these are options vs just futures?

I couldn't find exchange traded flys with ICE for 3month stirling, only exchange traded calendars

... sorry I misunderstood ... you said to use "options".

 

[Robert Morse]

How about CME. I did an RFQ for a May 17.5/18.25/18.75 as an example. Then requested the quote from MM and got .053/.068 65/57. Is this a good example?

 

[Adam777]

How about CME. I did an RFQ for a May 17.5/18.25/18.75 as an example. Then requested the quote from MM and got .053/.068 65/57. Is this a good example?

Sorry I only understand a little about options spreads. I am starting on the stirs futures spreads as they look much safer than outrights in something like CL.