Order not executing
- Thread starter EliteTraderNYC
- Start date
Technically you are not entitled to a fill on a spread even if your buy side is the ask and the sell side is the bid. I KNOW this is stupid but I had it happen to me right after the tech bubble burst and the subsequent bounce.
I think it was Sept of 2001 where I was buying a call spread in the DJX. I placed an order to buy the call spread for $1. The bid ask of the spread was 0.65 - 0.95 and I was not filled at $1.
ANyone could see we hit a bottom after the Nasdaq had fallen 80% and we were bouncing. Traders didn't mind selling naked calls even though the market was bouncing but because volatility was at HUGE levels and collapsing. They were protected by the vol crush, and could then hedge with a close to ATM call to get long themselves.
Traders were probably also caught short too and needed to get long, but they cant do that when the orders coming into the pits were getting them shorter. So they ignored any order that was not getting them long.
They are required to fill single options at the bid and ask but not spreads. I was frustrated but eventually cancelled the spread order and bought the spread in two pieces with EASE at $0.90.
I know it is stupid but so are so many things in life.
I think it was Sept of 2001 where I was buying a call spread in the DJX. I placed an order to buy the call spread for $1. The bid ask of the spread was 0.65 - 0.95 and I was not filled at $1.
ANyone could see we hit a bottom after the Nasdaq had fallen 80% and we were bouncing. Traders didn't mind selling naked calls even though the market was bouncing but because volatility was at HUGE levels and collapsing. They were protected by the vol crush, and could then hedge with a close to ATM call to get long themselves.
Traders were probably also caught short too and needed to get long, but they cant do that when the orders coming into the pits were getting them shorter. So they ignored any order that was not getting them long.
They are required to fill single options at the bid and ask but not spreads. I was frustrated but eventually cancelled the spread order and bought the spread in two pieces with EASE at $0.90.
I know it is stupid but so are so many things in life.
rmorse
Sponsor
It is not as stupid as it appears. You are looking at the NBBO where there can many exchanges providing limit orders to make up the NBBO. The complex order book (COB) is electronically monitored by market makers looking for an edge. If that NBBO is made up of public orders, not their markets, they might not find an edge to do that trade. Imagine if one market has a 1 lot that is bid $0.05 higher than their bid, why should they match that?