Front running option trade?

[horizon]

I'm not trying for a stock. It took me many many hours just to document and find this.

Why is it illegal?
I should rephrase my comment after giving it thought.
I know there are many specific FINRA rules for STOCKS, on when Market Makers are allowed to withdraw their quotes and not allowed.

I don't know what the rules are for options.

For stocks, there are clear FINRA rules, that if a Market Maker is displaying a quote and an order comes in to execute on their displayed quote, they are required to fill that order.

There is an exception where they are allowed to not fill it if they are already in the process of replacing the quote with a different quote, and that quote just hasn't hit the book yet.

There are several other exceptions like maybe you are having computer problems, you get a "get out of jail" card and can avoid getting slapped.

Some of these exceptions, FINRA puts a qty limit per xx days, that they can say "Nah, I won't fill that order", but after that FINRA will smack them.

Again, these are rules I know for stocks. I don't know if they apply for options.

As well, I am showing a 90 cent drop on the BID,
in 3 milli-seconds or less,
only an extreme move on just this strike
w/o movement in the underlining to justify it.
(over ~50 milliseconds, SPY moved from 443.4102 to 443.415. A half penny move.)
It looks like quotes from 7 different exchange routes, disappeared in 3 milli-seconds.


To me, this is HIGHLY SUSPICIOUS that Market Makers for ISEX, NSDQ, ARCA, BATS, MPRL, CBOE, EDGE, and PHLX did NOT live up to their FINRA obligations as Market Makers.
My only big question is, do the same obligation rules for stocks, apply for options?
Or are Market Maker obligations to fill orders on their quotes, more relaxed?

I think the rules for stocks should apply for options as well. I have limited knowledge about HFT so could not comment much. However, I saw JPM got fined $1 billion for spoofing last year or so, so I would think mm doesn’t mind to do illegal front run, maybe the deal is, is it big enough for the Sec to catch and fine them.

 

[TrailerParkTed]

Hi You, with no knowledge of this trade, and no desire to look into it, I'll give you my 2 cents. The options are traded on 16 option exchanges by multiple market makers and with customer limit order. The real size of these options is much bigger than displayed. I notion that a 200 lot would be something that would cause your concern is very low.

Hi Robert, on certain options I put small size on three Exchanges I see do some ugly prints. Today the Bid/Ask was $1.00 x $1.20 100x100 I had some contracts fill at $1.87(Sold) more hit $2.00 a odd Exchange. What causes weird or terrible fills for buyers or sellers outside the NBBO?


LightSpeed and IBKR hit the $1.12-$1.20s while Retail is filled almost double? They have never got busted, it’s part of a tiny edge I discovered when it works.

 

[Robert Morse]

I have no idea when those trades occurred or if they were part of a spread. Option exchanges do not allow trade throughs so it must be something else if you see a market 1.12/1.20 and the next sale is $1.87. I would ignore that volume.