Getting a fill from other exchanges...

C

Cabin111

So I am trying to buy back my CAR (Budget/Avis) option...Buy to close (close) for my Aug 23 $240. I want to do another call (sell to open). I am sitting there not wanting to give up my $10. (two calls $5. apart). I have it at CBOE...I could have gone through Fidelity routing, but PFOF might not give me the best deal. I'm trying to trade this out in the public exchanges. I'm the two at $.90 on the CBOE...With a counterpart with 1 at $.95.

I'm just wondering, does the other exchanges (other computer systems) see my offer on the CBOE?? The AMEX has x6 at $.95. Are they looking elsewhere for the best fill for them?? This has always been confusing to me...

Exchange
Bid
Mid
Ask
AMEX
0.70 x1
0.82
0.95 x6
NOM
0.70 x27
0.85
1.00 x4
BOX
0.70 x15
0.82
0.95 x7
CBOE
0.90 x2
0.92
0.95 x1
PHLX
0.00 x0
4.75
9.50 x10
ISE
0.00 x0
4.75
9.50 x1
BATS
0.70 x33
0.85
1.00 x10
PCX
0.70 x16
0.82
0.95 x2

PS Just got my fill at $.90
 
I then wrote another covered call (2) for the Jan 24 $210. I got $12.30 ($2,460.) for the 200 shares. A little extra income...I hope it won't get called away. I won't lose any sleep if it does...
 
If you want to close the option and sell another one, you are far better off doing it as a spread. Set up the spread to buy your short call and sell the new call.

When you send an order as a spread, it will generally be sent to an exchanges COB (complex order book) Here it will be looked at and filled as a spread. The advantages here are the MM will need less edge to fill a spread, than 2 legs individually. You can also trade the spread in pennies, vs nickels only in your options. You also won't have any leg risk.
 
Cabin111 said:
ETJ...Can you think of any reason a small (manual) trader would ever want to use BATS??

Thanks...
More...
They are one of the highest paying exchanges for supplying liquidity. In a non penny stock they will pay .85 in a rebate. If you are with a broker that passes these rebates along, it may be worth trading here.
 
FSU said:
They are one of the highest paying exchanges for supplying liquidity. In a non penny stock they will pay .85 in a rebate. If you are with a broker that passes these rebates along, it may be worth trading here.
More...

Only if you get a broker that actually passes these rebates along and doesn't manipulate the order routing mechanism to cheat you out of the rebates. BATS pays one of the highest rebates for adding liquidity but they also charge you the highest negative rebate when you take away liquidity so if your broker is IB that holds your order on their server and only sends it to the exchange at the last minute to turn a liquidity-adding order to a liquidity-taking order, then you will end up paying some of the highest exchange fees as well if you direct route your order to BATS.
 
TheDawn said:
Only if you get a broker that actually passes these rebates along and doesn't manipulate the order routing mechanism to cheat you out of the rebates. BATS pays one of the highest rebates for adding liquidity but they also charge you the highest negative rebate when you take away liquidity so if your broker is IB that holds your order on their server and only sends it to the exchange at the last minute to turn a liquidity-adding order to a liquidity-taking order, then you will end up paying some of the highest exchange fees as well if you direct route your order to BATS.
More...

I believe at Fidelity, they charge more for BATS executions with small orders.
 
Cabin111 said:
I believe at Fidelity, they charge more for BATS executions with small orders.
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That means they must be routing these small orders to BATS only when they are immediately executable and then passing the exchange fees onto you since they are considered liquidity-taking orders. Here is the rebate information for BATS on the IB website. https://www.interactivebrokers.com/en/accounts/fees/BATSstkfee.php?nhf=T Notice in the fine print that they consider an order as removing liquidity if they are immediately executable against any bid/offer sitting on the book. This is what IB did to my orders. Even though I directly routed my order to BATS as a limit order with a price far away from the NBBO, IB didn't send it to the exchange and instead held it on its server and then only sent it when the price on BATS was exactly matching my limit price so then my order even though it was a limit order still removed liquidity and I was charged double the exchange fee.

So just be aware of these tricks that brokers can play when you directly route to exchanges that pay you rebates. I don't know about Fidelity but brokers like IB definitely get its cut of the rebates. It says so in a disclosure.
 
ETJ said:
https://www.marketswiki.com/wiki/Options_Linkage
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This was the first version of the linkage. It has been replaced since (around 2014 or so). The process has changed but the results for retail traders are the same.

To answer OP's question, all US option exchanges have to ensure that public customer orders (PC/retail) are filled at NBBO. If an exchange doesn't have an opposite order at NBBO and needs to fill an incoming PC order, then it sends an offset order on behalf of the PC at an exchange sitting on the NBBO. Anyway, all this is transparent to the retail customer and the final print is still done at the original exchange.
 
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