Well there goes all that effort trying to split $0.50 wide spreads in the SPX... damn pennies 
Penny incements for options ?
- Thread starter IV_Trader
- Start date
More like 1.32 bid and 1.37 ask, instead of 1.30 / 1.35. I can't see the spread being less than a nickle.
Quote from optioncoach:
Well there goes all that effort trying to split $0.50 wide spreads in the SPX... damn pennies
Yeah, but this still doesn't change the idea that the SPX spreads will be wide. Now we can set a limit 0.04 above/below the mid instead of 0.05. YEAH BABY!!!!!!!
IB may make a fortune on cancellation charges.
I think they might make it rolling. With only the most liquid options first and then the rest.
How so? if anything, there will probably be less orders sitting at the mid that potentially get modified/canceled. With tighter bids due to the penny ticks, it is likely that traders will simply favor a quick fill rather than to sit at mid point and maybe get a penny improvement.
Now how tight the bids will be is still to be seen but if anything, i think it will reduce the tendency to cancel/modify.
With $.05 to $.10 gaps, then you'd want to cancel your option orders only after a larger move in the stock price. With penny increments, you may be jumping back and forth every minute. Traders looking for middle prices would not want to use exchanges or brokers that charge for cancellations.
LOL i see what you mean. But that would be if spreads still stay atleast .05 wide. If spreads tighten like they did with stocks, traders wont split the bid/asks as much in my opinion.
One thing is for sure though, with these penny ticks we won't be able to leg into better fills by simply scalping the autoquote bots should the spreads still stay wide.
Oh well, win some lose some.
If you can make it with .05 - .10 increments, you'll thrive with .01.
Should result in higher win percentages as well as beefed up year end totals.
(much wringing of hands and the licking of chops in the background)
The groundwork will be set for the trading of options like that of stocks in many securities at the beginning, and more liquidity spilling into the overall options markets. Practically the only reason to own stocks will be for the divident, not much else if you're good at trading options.
Should result in higher win percentages as well as beefed up year end totals.
(much wringing of hands and the licking of chops in the background)
The groundwork will be set for the trading of options like that of stocks in many securities at the beginning, and more liquidity spilling into the overall options markets. Practically the only reason to own stocks will be for the divident, not much else if you're good at trading options.