Execution of very large options orders

[smile]

How are very large options orders executed? I mean orders that are much larger than the current bid or ask size.

For example, today someone bought 10,000 contracts of the Dec 12 115 Put for $4.80 at 11:04:41 on the ISE exchange with the underlying at 132.22.

The bid/ask size for that strike is typically in the hundreds of contracts today. The market was 4.78 x 4.84 at the time of execution.

Many thanks for any insight.

 

[rmorse]

Quote from smile:

How are very large options orders executed? I mean orders that are much larger than the current bid or ask size.

For example, today someone bought 10,000 contracts of the Dec 12 115 Put for $4.80 at 11:04:41 on the ISE exchange with the underlying at 132.22.

The bid/ask size for that strike is typically in the hundreds of contracts today. The market was 4.78 x 4.84 at the time of execution.

Many thanks for any insight.

An Execution broker. They show the order to their other customers and look to cross the order. They charge a commission to both sides.

Bob

 

[smile]

So, IB says their trade desk will help execute options orders above 500 contracts.

http://www.interactivebrokers.com/en/trading/pdfhighlights/PDF-OptionsDesk.php

Is this what you mean?

 

[rmorse]

Quote from smile:

So, IB says their trade desk will help execute options orders above 500 contracts.

http://www.interactivebrokers.com/en/trading/pdfhighlights/PDF-OptionsDesk.php

Is this what you mean?

I don't know which broker you can use. If you have an account at IB and you want to make use of their trading desk, you have to talk to them. There are MANY options sales brokers out there. GFI is the biggest. They take institution orders and blast them out to a thousand traders and look for a response.

A great deal of the option volume on NYSE AMEX, PHLX and CBOE are crosses that you have no access to as an electronic trader.

EG. I was a floor market maker on the AMEX and a GFI client. The order would come across:

GE Jan 2013 20/25 1x2 call spread: seeing .25/.35 25K up. Have buyer in hand for 25K/50K.

They are asking for an offer. So if they get the entire offer at .33, they show to the client, get a buy um, they try to cross on the floor with a broker.