Odd Lots?

I have an interesting theory about the implications of my one-or-two options contracts bids, which IB SMART routes to PHLX. Take a look at this article first http://www.siliconinvestor.com/readmsg.aspx?msgid=16195448

Now, my theory is that, I'm accidentally stimulating behavior like that. What I see is, lets say a near-term OTM call has a bid of 40 and an ask of 55. I lob in an order for 3 contracts at say, 45. IB SMART routes ito PHLX, where it sits there like they ate a frozen cheesecake. Meanwhile, I see all kinds of other trades whizzing by. Not on PHLX (What's the difference between Philadelphia and a graveyard? Philadelphia has street lights) of course, but on some of the other 5 options exchanges.

If you're with me so far, PHLX has made IB happy, they've made me unhappy, and here's the punchline, they put the hurt on the specialists at the other exchanges who are required to fill a continuing stream of large orders at the (my) best bid. While I just sit there.

Should I instead 1. pay 1.75 per contract to direct route at IB 2. Which exchange should I use other than PHLX and PSE? 3. Does BOX really get your price improvement, or should I go with CBOE for more liquidity and better execution? 4. Abandon IB, or just their SMART?
 
I'd get IB on the horn and get someone there to verify/deny that's going on. It could take awhile, but it might be worth it.

Or maybe PM riskarb or def. The former trades options trough IB (although I don't know if it's equities) and the latter is the very unofficial IB rep here on ET.

If you have to direct route for $1.75 there's better brokers out there.

Let us know.

Quote from luh3417:

I have an interesting theory about the implications of my one-or-two options contracts bids, which IB SMART routes to PHLX. Take a look at this article first http://www.siliconinvestor.com/readmsg.aspx?msgid=16195448

Now, my theory is that, I'm accidentally stimulating behavior like that. What I see is, lets say a near-term OTM call has a bid of 40 and an ask of 55. I lob in an order for 3 contracts at say, 45. IB SMART routes ito PHLX, where it sits there like they ate a frozen cheesecake. Meanwhile, I see all kinds of other trades whizzing by. Not on PHLX (What's the difference between Philadelphia and a graveyard? Philadelphia has street lights) of course, but on some of the other 5 options exchanges.

If you're with me so far, PHLX has made IB happy, they've made me unhappy, and here's the punchline, they put the hurt on the specialists at the other exchanges who are required to fill a continuing stream of large orders at the (my) best bid. While I just sit there.

Should I instead 1. pay 1.75 per contract to direct route at IB 2. Which exchange should I use other than PHLX and PSE? 3. Does BOX really get your price improvement, or should I go with CBOE for more liquidity and better execution? 4. Abandon IB, or just their SMART?
More...
 
I PM'ed def; will advise.

There was also some earlier discussion of "just route a Price Improvement order but use SMART and it will end up at BOX" but I can't seem to get that to work, TWS gives me an error message.

I'm happy enough at IB, though the question should be asked: how can I evaluate the size of the 6 different options exchanges and who will let me route to the most fluid one for less than IB's $1.75 "non-SMART" routing. An API is not mandatory; I can barely trade them by hand, much less automate it.
 
Theres a way to eliminate undesired ecns on smart...click configure--smart routing and fill the blanks on symbol--exchanges; on security type select opt (for options routing), and u are done.
 
hmmm...prob is u can only exclude amex or/and box. Not very nice is it.
I'll try to get in touch with IB reps and see if they'll do something about it, 'cause frankly it's not fair.
 
Quote from luh3417:

There was also some earlier discussion of "just route a Price Improvement order but use SMART and it will end up at BOX" but I can't seem to get that to work, TWS gives me an error message.
More...
def PM'd me that that indeed can NOT be done: PIP orders need to be direct routed to Box, at $1.75.

Then again, don't underestimate the 10¢ Box cancellation fee, compared to $1.20 at the others (well, 60¢ at PHLX...... hmmm, PHLX again .... :( )
 
Hey, at least IB will route a marketable order to the exchange with the best price. My experience with Ameritrade has been that (1) they'll route the order to an exchange of their choosing, even if this locks or crosses the market, and (2) if due to fast-changing conditions you happen to enter a limit order that's inferior to the NBBO but still within the spread of the exchange they send it to, you may get filled at the inferior price (e.g. if BOX is .90x1.00 and PHLX is .80x1.05 and you enter a buy order for 1.05, you may get filled by PHLX at 1.05). An Ameritrade rep even told me that they do not guarantee you'll get the best price when trading options.

Usually when your order locks the market, the specialist at the exchange where your order is marketable will give you the fill, but not always. Are there any brokers who will route your non-marketable to another exchange if it suddenly becomes marketable there?
 
Quote from loufah:

Hey, at least IB will route a marketable order to the exchange with the best price.

Usually when your order locks the market, the specialist at the exchange where your order is marketable will give you the fill, but not always. Are there any brokers who will route your non-marketable to another exchange if it suddenly becomes marketable there?
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I would bet that if several brokers are tied for the best price, SMART routes to the exchange which returns to IB the highest 'payment for order flow'.

When you say 'marketable order' do you mean market order? I mostly use limit orders.

I should cross-reference this thread where fframe38 opines "PHLX, PSE, AMEX - Never, never send any order there. Very little liquidity. It will NEVER fill between Bid/Ask, sometimes take long time to cancel orders. Slow to cancel/replace orders." http://www.elitetrader.com/vb/showthread.php?s=&threadid=63839

Can anyone explain further about "lock the market"? I found some discussion of it here. The options bid-ask spread is often so high it woudl be hard to lock the market. http://www.inetats.com/subscribers/emailarchive/2004/20040610_a.asp
 
Quote from Bitstream:

hmmm...prob is u can only exclude amex or/and box. Not very nice is it.
I'll try to get in touch with IB reps and see if they'll do something about it, 'cause frankly it's not fair.
More...

Good luck , I tried it before...talked to IB reps at Vegas show and Def on ET about option to exclude PHLX, nada.
Let us know their answer , I do hate them (PHLX) so much...
 
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