IB and Options
- Thread starter tntneo
- Start date
I'm not using IB and I've had basically the same thing happen, so it is the "locked market" scenario. Basically they don't have to buy your options at the ask, even if the bid and ask are the same.
I think part of the problem for traders is that you never know what you are going to get.
On the PSE, they just started to only allow auto-x for cleint vs client trading for ONLY the quantity posted (ie it could be less than 20). If you attempt to trade more than the quantity posted then your order goes the manual route (gets lost). In some cases you can get auto fills when the market is locked but not in others. The market makers can easily change their parameters and often do (even intra day).
On the CBOE, they just started to honor some quotes when the market is locked but once again it appears that they are rolling this feature out so it is difficult to tell which stocks it applies to. Trial and error for now.
On the PHLX and AMEX, they seem to be hit or miss. This may have something to do with WHO the specialist is but for the most part, quotes may or may not be honored even if the market is neither locked/crossed.
You usually know what you are going to get with the ISE. You can even get some auto's when the market is crossed. You just have to know which stocks.
Despite all this, it is getting better and I expect it to get better in the future. I would advise all traders who actually care to write to the SEC.
The SEC is looking for comments on the "Repeal of Options Trade Through Disclosure Rule".
http://www.sec.gov/rules/proposed/34-46002.htm
In this rule there is an implication that, once linkage is imposed then there will be no need for the trade through rule as it should no longer happen. I, however diasgree with this. In fact, it appears that nothing will really change with linkage. Please let the SEC know what happens to you on a daily basis so as to ensure that it won't happen with linkage. I have also been told that John McCarthy of the SEC's Office of Compliance, Inspections and Examinations is also interested in hearing about what really goes on in the options market.
Now, is the time to voice any concerns (before linkage occurs)
On the PSE, they just started to only allow auto-x for cleint vs client trading for ONLY the quantity posted (ie it could be less than 20). If you attempt to trade more than the quantity posted then your order goes the manual route (gets lost). In some cases you can get auto fills when the market is locked but not in others. The market makers can easily change their parameters and often do (even intra day).
On the CBOE, they just started to honor some quotes when the market is locked but once again it appears that they are rolling this feature out so it is difficult to tell which stocks it applies to. Trial and error for now.
On the PHLX and AMEX, they seem to be hit or miss. This may have something to do with WHO the specialist is but for the most part, quotes may or may not be honored even if the market is neither locked/crossed.
You usually know what you are going to get with the ISE. You can even get some auto's when the market is crossed. You just have to know which stocks.
Despite all this, it is getting better and I expect it to get better in the future. I would advise all traders who actually care to write to the SEC.
The SEC is looking for comments on the "Repeal of Options Trade Through Disclosure Rule".
http://www.sec.gov/rules/proposed/34-46002.htm
In this rule there is an implication that, once linkage is imposed then there will be no need for the trade through rule as it should no longer happen. I, however diasgree with this. In fact, it appears that nothing will really change with linkage. Please let the SEC know what happens to you on a daily basis so as to ensure that it won't happen with linkage. I have also been told that John McCarthy of the SEC's Office of Compliance, Inspections and Examinations is also interested in hearing about what really goes on in the options market.
Now, is the time to voice any concerns (before linkage occurs)
I like IB very much. And I am very pleased since I came back there, despite the connectivity issue which are lasting for too long now. it should be fixed already.
Still, it's a great platform and when the universal account kicks in, it will be something really unique for individuals and small trading corps.
Regarding Options, which is the topic I started here. I would just advise members not to use SMART for option executions.
It often works well. But the problem is when it does not work at all. It is usually the worst times.
The problem with SMART is the fact you don't know the destination in advance. That's the feature, I know. But that's the trap in that case.
In a locked market (and sometimes a normal market), your order may go somewhere it won't be filled.
Then, not only that, but it may be hard to cancel or modify the order (it would turn magenta on TWS and stay that way for MINUTES!).
In that case, you have to wait because sending the order again brings the risk to be short when both orders finally executes (of course it happened to me too).
What worked for me : I routed to ISE. The order either executes or not. But at least you know what is the exchange and you choose one where, typically, it's easy to cancel an order (ISE is fair for what I trade).
I still use smart to consolidate the best quotes available, but not for execution anymore.
tntneo
Still, it's a great platform and when the universal account kicks in, it will be something really unique for individuals and small trading corps.
Regarding Options, which is the topic I started here. I would just advise members not to use SMART for option executions.
It often works well. But the problem is when it does not work at all. It is usually the worst times.
The problem with SMART is the fact you don't know the destination in advance. That's the feature, I know. But that's the trap in that case.
In a locked market (and sometimes a normal market), your order may go somewhere it won't be filled.
Then, not only that, but it may be hard to cancel or modify the order (it would turn magenta on TWS and stay that way for MINUTES!).
In that case, you have to wait because sending the order again brings the risk to be short when both orders finally executes (of course it happened to me too).
What worked for me : I routed to ISE. The order either executes or not. But at least you know what is the exchange and you choose one where, typically, it's easy to cancel an order (ISE is fair for what I trade).
I still use smart to consolidate the best quotes available, but not for execution anymore.
tntneo