market orders on open

S

silk

Can someone explain how option market orders entered prior to the open are executed. Is there one opening pring, or do the sells get executed at the bid and the buys at the offer?

Is this a dangerous way to enter an order. I'm talking a small order like 10 or 20 contracts.

Is it possible if i want to sell 10 contracts at market at the open that i could end up getting a better fill because perhaps there might be more people buying contracts on the open (thus i would get filled closer to the offer)?

If i'm going to buy a straddle at market, is there really much difference than buying at market on the open or say doing it at market at 9:45?? Talking 10 contracts.

Thanks in advance.
 
Quote from silk:

Can someone explain how option market orders entered prior to the open are executed. Is there one opening pring, or do the sells get executed at the bid and the buys at the offer?

Is this a dangerous way to enter an order. I'm talking a small order like 10 or 20 contracts.

Is it possible if i want to sell 10 contracts at market at the open that i could end up getting a better fill because perhaps there might be more people buying contracts on the open (thus i would get filled closer to the offer)?

If i'm going to buy a straddle at market, is there really much difference than buying at market on the open or say doing it at market at 9:45?? Talking 10 contracts.

Thanks in advance.
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Be careful about trading during the opening rotation. This is one time where an option can trade through the NBBO.
 
Yes , there is only one opening price, but it is different on each exchange. If you enter a sell of ten contracts and somebody else has 100 lot buy, your order would get price improvement in that situation.
 
Silk,
If i'm going to buy a straddle at market, is there really much difference than buying at market on the open or say doing it at market at 9:45?? Talking 10 contracts.

Better to wait, the bid ask spreads seem to narrow later in the day on some stocks.

In your straddle example are you buying market on the open to capture some price advantage or is it urgency to put on a position?
 
I would personally never send a Market On Open order.

The market makers can see your order in the book and they skew the price up or down to fit their desires. Even if it is not supposed to be seen by the MM the book staff can verbally tell the trader it is there. Or even dumber, they may be looking at the same computer as the book staff.

A 10 lot may not get screwed too badly, but the larger the order the more they will try to screw you.

If a broker handles your order (not likely on 10 lot MOO) you will likely be OK.

:)
 
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