I'm trying to sell a put and my limit order is below the current ask price as shown in IB. I expected that once I submitted my order, the order would either immediately execute or the ask would be updated to at or below my limit order price. However, the best ask price has not been updated. I interpret that exchange = SMART means to select the exchange with the best bid / ask. I know that this is a thinly-traded stock, but my order has been submitted for several minutes now.
IB Option Sell Limit Order below ask not updating ask
- Thread starter ET180
- Start date
Yes ....... the bid/ask should change to 0.05/0.09 - and that change should be instant. Obviously if you want the order filled you will mostly likely will have to change the price to $0.05. Even $0.06 could go unfilled.
rmorse
Sponsor
Either your market data is delayed or your order was not sent to an option exchange. I know their complex orders, in the past, did not reside on the COB of any option exchange unless they deemed it actionable. That might have changed. At Lightspeed we offer DMA and smart routes. The smart routed orders rests on an option exchange if not execute at the time of the order being entered for both single leg and spreads.
Bob
Bob
rmorse
Sponsor
IB charges more for option DMA.
This happened all the time with SPX options with me, they told me that either they're "holding it" until they decide it's "marketable" or that their broker is "marketing" it. Apparently they get to decide if they want to send your order to the exchange or not on their whim. Yet another reason I'm no longer with IB.
I don't think it's delayed data because I checked on TD Ameritrade and got the same quote. I guess both data feeds could be delayed. For data feeds, I pay for IB's US Value Bundle and OPRA (US Options Exchanges) - "Provides option data from AMEX, ARCA, BATS, BOX, BSE, CBOE2, CBOE, ISE NASDAQ AND PHLX". I was under the assumption that when I place a limit order to buy or sell an option, the order is broadcast to all of those exchanges simultaneously.
I guess this isn't a big issue as I mostly trade options on very liquid ETFs. I was just under the impression that IB was a direct market access provider. Maybe an IB representative can chime in to clarify.
I'd be very surprised if a broker is allowed to hold customers orders until they feel like it. Seems like there would be some kind of regulation against doing that as that would give them the power to manipulate the market by dumping a bunch of orders all at once to drive the price up or down. I know that's an HFT technique, but in that case, the firm is risking their own money. If the broker does it, then the broker would be risking their client's money. That's a huge conflict of interest.
rmorse
Sponsor
Just to be clear, orders are not "broadcasted" to the exchanges. They are either routed there or not. Each exchange has their own order book, then OPRA disseminates the quotes for each exchange. You either pay for L1 or L2. L2 provides a view of each exchange vs just the NBBO for L1.
When you use Direct Market Access, you have the expectation that your order will go directly to the exchange you choose. When you use anyone's SMART route, you have no idea where that order will end up. Just because they call it "SMART", doesn't mean you are getting a better execution. What is typical for an option SMART route, is directing that order to either an option market maker or a group of them. If they don't execute that order at the time of entry, it should be sent to the exchange that fits their needs, not yours. That might mean lower fees for them or higher rebates for them. What many SMART option routes offer is a means of entry to avoid the option exchange maker/taker fees, which many retail customer prefer. Some SMART routes enter option dark pools. Some are tied to an algo to search for liquidity, rebate etc. These often cost extra and are not often available to retail traders.
The fact that that order was NOT shown after a short time, say 1 to 2 seconds, and it was improving the NBBO, only leaves a few explanations. Your order never arrived at any exchange, your order did arrive but the exchange did not update yet from system issues, your market data was delayed or frozen on your trading platfrom. I can't think of another reason that makes sense. What I can't tell is which one happened to you. I suspect if it happens everyday, it is likely that your order was not posted to one of the 14 option exchanges.
Bob
rmorse
Sponsor
SPX is a little different in the way that the CBOE handles these orders. You order can be sent directly to the electronic order book, I think called Hybrid 3.0 or to a broker. If the broker is handling your order, he/she still has a best execution responsibility.