Ib options stop question

M

MiniGrasshopper

okay, i couldnt figure this out so i figured id ask and see if anyone knows,

im using family account (dont know if this is of importance on my question so i stated it anyways)


the question is: I have been intraday trading Options and i cant seem to figure out how the stop works..I transmit a stop attached to my trade..JUST like i do with stocks and futures..and i watch the option trade..lower & lower IGnoring my stop..it doesnt even seem to achnolege it..im wondering if anyone knows why or how to fix it so it works right..

so far i havnt been hurt to badly from it since im actively watching..tho i do go to bed early some nights..which can be painful if i cant figure this out :(

Ps: im trying to use just plain stop's..so they exit as market order once the price is triggered
 
If you enter a stop-market order to an options exchange...guess what happens?

1) The market maker has a market order and he screws you.

2) Maybe IB is screwing something up.
 
Quote from MiniGrasshopper:

okay, i couldnt figure this out so i figured id ask and see if anyone knows,

im using family account (dont know if this is of importance on my question so i stated it anyways)


the question is: I have been intraday trading Options and i cant seem to figure out how the stop works..I transmit a stop attached to my trade..JUST like i do with stocks and futures..and i watch the option trade..lower & lower IGnoring my stop..it doesnt even seem to achnolege it..im wondering if anyone knows why or how to fix it so it works right..

so far i havnt been hurt to badly from it since im actively watching..tho i do go to bed early some nights..which can be painful if i cant figure this out :(

Ps: im trying to use just plain stop's..so they exit as market order once the price is triggered
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You're DAYTRADING options and entering stops into the market? And with a family account?

Man, do the market makers just love your ass! Maybe IB can let you attach a note to your trade saying "Hey, come suck my blood!"
 
family account really has nothing to do with how i trade- i just use my OWN sub account as if its an independant ib account when im doing my own trades ..and daytrading options..REQUIRES a stop alot of time..since i only trade well moving options (i.e. move 40-400% a day)

even with a stop limit..it doesnt seem to be noticed when the price is trading at my stop...My question was..why isnt my stop being noticed..shouldnt it be triggered when trading at that price...like it does with stocks & futures?
 
You probably need to be entering LMT orders on the options but you could also use conditions based on the UNDERLYING symbol. If it's a real liquid option such as QQQ, you could then submit MKT orders based on a condition, but ALWAYS TRIGGER the stop based on the UNDERLYING, not the option.

Here's a couple ways to do this with MKT orders.

Assume you have a long position of 10 QAV FH ( QQQ June 34 calls ).

1. Protective stop loss order at 36.07

You do this as follows:
Type in (do not transmit) an order to sell 10 QAV FH @ MKT using SMART routing. Right click the order, click Modify Condition to bring up conditional screen

Fill out the condition QQQ (AMEX) <= 36.07, Double Last
Make sure bottom checkbox is marked as "SUBMIT The Order".
After pressing OK, then submit the order.

It will remain on IB's server waiting for 2 consecutive QQQ ticks <= 36.07, then it will submit a MKT order and you will be out. I have never had a problem doing this in about 9 months of using this method.

Note, this is NOT recommended on low volume options, as you will eat the wide spread and maybe more than even the normal spread.

2. Protective stop + profit target to sell based on 1 MKT order

Same scenario, enter (do not transmit) a MKT order to sell, right click it, add 2 conditions joined by OR:

QQQ <= 36.07 Double Last OR QQQ >= 36.52 Double Last
Transmit the order.

In this case, the order will be submitted either when your stop is hit or your profit target is reached.

The beauty of this method, is that you can always modify the prices at any time and resubmit the order without getting charged for a cancel fee. Sometimes I specify a really high target price initially, then once I know where I want to sell, I modify it down to the real target. In this way, the order functions as a stop, and I don't have to cancel the stop order to sell out at my target later.
 
Mini: Without the details, it's impossible to know where the problem lies. If the stop is remaining dark blue, that means it's not triggering. If it turns green and you still don't get a fill on a market order or a marketable limit order (if it was a stop limit), then that is a different problem.

IB can easily look up the audit trail of the order, compare it against time & sales, and should be able to explain to you why it didn't get done. Alternatively, post the order details here and perhaps we can do something more than guess at the problem.

Note that you can now create a detailed audit trail in TWS: Configure->Misc->Create Audit Trail. In the latest versions, there is also a nice "decoder" for those audit trails: View->Audit Trail.
 
The problem is not setting the stop trigger properly. In this case, it should be set to trigger on bid/ask and not on last, which is the default.

The bid/ask could be miles away, but unless someone makes a trade to have a print, a stop that is triggered on last will not activate.

autotrader
 
I trade options that VERY VERY rarely exceed 5 cent spread...i watched it trade...at my stop....under...back to my stop...then under again...to see if it stops..it dont..it just sits there chilling in blue colour.

but o well, ill take the advice the bloke gave on modified Stock stop thingy, are you 100% sure it has 0 fee's with that method? ..since your constantly changing your stop to trail at particular points..it will be SOO handy to use

reason i ask are u sure...i dont really understand how its not costing cancel fee's..you are transmiting the order..then canceling to make a new stop..at next point u wana trail at...how does it cost cancel fee's on the previous transmited order..

Thanks for the info
 
What about a stop-limit order?

You can use that.

I think that using a stop-market order for options is just plain ignorant.

A stop-limit order is safer for you because then the MMs can not screw you as badly.
 
i didnt post this to be mocked..i posted this for helpful advice..sadly knowing full well that 99.9% of ET post rude & bitter remarks, thankfully..some people post nicer & helpful stuff (like the bloke who mentioned how to skip around the fee's) if i hoped on a shela name and posted..id have every1 being real nice..bit of a sad fact but o well

my only real question now is.....i dont understand how it can cost no cancel fee on the order...since its transmited viar an options order..even tho its runing on if the STOCK price triggers..shouldnt it still fee..since its transmited under an options sell order?

Thank you everyone who has offered good/bad advice..in a NICE manner, the critizism has been helpful and the few idea's will be implimented into my money management system:)
 
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