IB and strange option rules

[Htrader]

In its latest email, IB sent out a link to a page with updated rules for option orders. Here's the link:

http://www.interactivebrokers.com/index.html?html/companyInfo/opt_exch_rules.html~top.body

In there, it talks about how you can only place one order on the same side of the market in the same option class every 15 seconds. So basically, if you wanted to increase your position, you'd have to wait 15 seconds before doing so. But even stranger is the rule about the CBOE where you can't send multiple orders on the same option at all. Is this common at other option firms?

 

[def]

these rules are enforced by certain exchanges (CBOE etc). for more info look for IB's comment letter arguing against the rules.

 

[bro59]

The rule is designed to prevent you from scalping options, or narrowing the spread. Guess the exchange is trying to protect its profit center, and take care of their members. If, for example, you wanted to go long an equity call but not pay the entire spread you can first offer out 1 contract for sale just above the bid. Many times the exchange will match your sell with a 10 lot in which case you could then hit the offer and get your options on the cheap. In that case you would be on both sides of that market, and they don't allow that with these rules.