First speaking generally, when you post a limit order near the mid price in a particular instrument, you are providing a service to the other market participants. You are offering immediacy of execution at your specified price. Whether the limit order gets filled or not has to do with several factors:
1. The fair value of the instrument in question. Since the instrument we are discussing is a vanilla index option, this fair value includes all of the parameters in the theoretical pricing model. The probability of execution approaches unity as the price of the limit order approaches theoretical fair value, assuming a liquid market.
2. The private utility function of the other traders in the market. This includes the value of any information that other traders may have about order flow, direction of the underlying, other parameters relevant to the fair value or future value of the instrument, and their relative urgency to trade.
3. Numerous other factors that need not be discussed in this post.
Having discussed the "rules of the game", let us examine several likely scenarios in which the limit order is executed:
1. The order is executed when the price is significantly less that the theoretical fair value for the option. This is effectively an arbitrage condition, and can occur when rapid changes occur in the parameters of the theoretical pricing model. For example, when implied volatility or the price of the underlying increase or decrease very quickly.
2. The order is executed when another trader is informed about the future price of the option. Quite simply, the counterparty to the trade is aware of some factor that you are not, and is eager to take your liquidity to take advantage of the situation.
3. The order is executed when another trader has an urgent need to trade. This could be because they are filling the other leg of a spread, because they are taking a loss or profit, or for other reasons.
You seem to be under the impression that you are getting some advantage over the market-makers or other market participants. In reality you are providing them with a very valuable service called liquidity. Market-makers offer liquidity in the market place in the same way, by posting their prices and sizes to the public. As you have observed, they do this at a considerable discount or premium to the theoretical fair value, in the hope that they can offset the risky inventory at a small profit. They are not, as you seem to think, required to fill orders at your posted price. They are required to fill orders at their posted price. They are not "loosing out" on order flow because you have posted a narrower spread; they do not want to trade at your price. They want to trade with a theoretical edge to maximize the likelihood and relative size of their profit, that is the business they are in.
Since we know that you are attempting to fill a spread order, your risk is that the net price of your spread might be much worse on average than it could have been if you worked the entire order as a spread.
You are not pulling the rug on anyone.
