Do the futures exchanges monitor option trading for out of range trades? or do they only investigate if someone complains that they paid an unfair price?
out of range trades
- Thread starter futures_shark
- Start date
I learned long ago to use limit orders, smartass. Nothing happened I'm just asking a question. That is what these forums are for, correct?
Say you wanted to transfer funds from one account to another without paying wire fees.
Offer an OTM option at $10 from one account and buy it in the receiving account.
Would you get a call from the exchange? or the brokers? regulators?
I checked on the cbot website and could not find any rules related to taking both sides of a trade. Actually that is what I should have titled this thread.
interesting question...........your wire fees must be steep......
dont know the answer...and yes the forums are here for us to occasionally beat on each other.....
I mistakenly entered a market order one time and was lynched by the crude oil options pit.........the site of many such lynchings
dont know the answer...and yes the forums are here for us to occasionally beat on each other.....
I mistakenly entered a market order one time and was lynched by the crude oil options pit.........the site of many such lynchings
You can't trade with yourself as a regular trade if that is what you are asking. You can do an ex-pit transaction that moves your position from one house to another in which the price is irrelevant and is agreed upon by the two houses beforehand. It wouldn't be reported in the daily range of prices. Usually people do this to change houses if they don't want to liquidate the position or maybe to offset, but i don't think it moves the margin from onr to another. One leg of intermonth spread trades can be outside of the day's range as long as it's traded and reported as a spread.
It all depends on what exchange you are trading. In fact your plan, which I certainly would not recommend as you would have to face a barrage of questions from your brokers compliance department, could end up costing you alot of money as the exchange could bust your trade and charge you for busting it!
1. if your trading between different brokers why would the brokers compliance department even get notified of the trade?
2. If there were different names on the accounts, would that still flag the exchange regulators if the trade was on the CBOT.
3. I'm not thinking about this to save on wire fees. I'm just curios as I haven't been able to find any information on the exchange sites or elsewhere dealing with the topic of trading with yourself or trades in OTM options that are out of line with the fair value.
Where would these rules be posted? NFA? CFTC?
2. If there were different names on the accounts, would that still flag the exchange regulators if the trade was on the CBOT.
3. I'm not thinking about this to save on wire fees. I'm just curios as I haven't been able to find any information on the exchange sites or elsewhere dealing with the topic of trading with yourself or trades in OTM options that are out of line with the fair value.
Where would these rules be posted? NFA? CFTC?
OK I finally found it. Definitely against the rules.
501.00 Fictitious Transactions - It shall be an offense against the Exchange to create fictitious transactions or to give an order for the purchase or sale of futures or options the execution of which would involve no change in ownership, or to execute such an order with knowledge of its character. 142 (04/01/05)
http://www.cbot.com/cbot/docs/rules/51836.pdf
I'm guessing there are automated alerts that go out to someone in the exchange if a trade goes off x% away from last trade or when there is no market such as a OTM option.
501.00 Fictitious Transactions - It shall be an offense against the Exchange to create fictitious transactions or to give an order for the purchase or sale of futures or options the execution of which would involve no change in ownership, or to execute such an order with knowledge of its character. 142 (04/01/05)
http://www.cbot.com/cbot/docs/rules/51836.pdf
I'm guessing there are automated alerts that go out to someone in the exchange if a trade goes off x% away from last trade or when there is no market such as a OTM option.
Futures Shark,
This point you bring out I would like to comment on. I have system that I need to open up two accounts one in Wifey's name and one in mine, I would trade both. Over the years I have never tried it or traded it because I worried that I would be caught and perhaps incarcerated, fined or both for the intent of it...
I felt it was not worth it.
Michael B.
2. If there were different names on the accounts, would that still flag the exchange regulators if the trade was on the CBOT.
This point you bring out I would like to comment on. I have system that I need to open up two accounts one in Wifey's name and one in mine, I would trade both. Over the years I have never tried it or traded it because I worried that I would be caught and perhaps incarcerated, fined or both for the intent of it...
I felt it was not worth it.
Michael B.
2. If there were different names on the accounts, would that still flag the exchange regulators if the trade was on the CBOT.