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Futures options liquidity issues
- Thread starter nravo
- Start date
Quote from nravo:
I'm curious. Why would you want to effectively make a market (without the apparent benefits of being a market-maker)?
I would buy the bid and sell the offer and then hedge.
what are the apparent benefits of being a market maker in gold options anyway? I dont think there's an algorithm for flow
In the US, at least, such pre-arranged trades are illegal.
https://www.interactivebrokers.com/...eView?ad=noticePreArrangedFuturesTrading.html
http://www.cme.com/files/20040726S-4119a.pdf
http://www.cbot.com/cbot/pub/cont_detail/0,3206,931+32351,00.html
https://www.interactivebrokers.com/...eView?ad=noticePreArrangedFuturesTrading.html
http://www.cme.com/files/20040726S-4119a.pdf
http://www.cbot.com/cbot/pub/cont_detail/0,3206,931+32351,00.html
Quote from FullyArticulate:
In the US, at least, such pre-arranged trades are illegal.
https://www.interactivebrokers.com/...eView?ad=noticePreArrangedFuturesTrading.html
http://www.cme.com/files/20040726S-4119a.pdf
http://www.cbot.com/cbot/pub/cont_detail/0,3206,931+32351,00.html
yeah be careful out there rosy u may get caught red handed leavin' a trail of solicitations on the net.
Of course. Everyone knows the government's primary job is to save the citizenry from their own stupidity. Thank goodness the US banned online gambling! Finally someone was thinking about the children.Quote from Bitstream:
does there need to be one? i mean does the pdt has any ?
It's also illegal to place both a bid and an ask on the same contract at both CBOT and CME. That one bothers me--if the MM can't do better than the huuuge spreads they're offering in some places, why can't I? EUR XT options ocasionally have bid .0003/ask .0015. I'd happily buy at 5 pips and sell at 10, but I can't legally make that market.
The rule first appeared in the 1930s. It became popular in the '20s to form "investment clubs" which would run up the price of stocks by buying from each other within the club (one member sells short to another member who goes long). Essentially, the transactions were risk free for the club, but shares were removed from circulation causing the price to run up. More often than not, the runup would cause frenzied buying from non-club members. The club would then dump the stock during the frenzy and the shorts would cover in the ensuing panic.Quote from nravo:
What"s the rationale for the illegality?
Very low risk, very profitable. As a result, pre-arranged transactions are now banned.
There are many more details of such schemes in A Random Walk Down Wall Street.
yeah but in the case of rosy she's just a mm, with no intention of doin' that, what's wrong with it...she eventually profits from the spread and u get a better price: both winners and no losers whatsoever.
Quote from FullyArticulate:
The rule first appeared in the 1930s. It became popular in the '20s to form "investment clubs" which would run up the price of stocks by buying from each other within the club (one member sells short to another member who goes long). Essentially, the transactions were risk free for the club, but shares were removed from circulation causing the price to run up. More often than not, the runup would cause frenzied buying from non-club members. The club would then dump the stock during the frenzy and the shorts would cover in the ensuing panic.
Very low risk, very profitable. As a result, pre-arranged transactions are now banned.
There are many more details of such schemes in A Random Walk Down Wall Street.
This arrangement is pretty innocent. At the same time, someone advertising in many public forums many times, "Let's break the law together, IM me for more details" will eventually draw the attention of someone at the CFTC or SEC.Quote from Bitstream:
yeah but in the case of rosy she's just a mm, with no intention of doin' that, what's wrong with it...she eventually profits from the spread and u get a better price: both winners and no losers whatsoever.
Since trading is about as anonymous as Internet usage, it won't be hard to get caught and fined.
But really, I don't care... Caveat emptor, caveat venditor--that's my only reason for posting.