Quant/Algo system for scalping stock options?

[mmt]

You can use Actant which is a options trading software. They connect to IB.

 

[marketsurfer]

I assumed your question was about scalping options in a customer account. If you want to build your own trading system for market making and connect directly to an option exchange as a member, that is a very difficult task. I'm going to continue to assume you mean in a customer account.

Many exchanges do not allow priority customers, those order go in front of firm and professional customers, to make two sided markets. You will be displacing members. So you can only enter either a buy or sell order in a strike. IB will not allow you to enter both a buy and sell order, even on exchanges that allow it. Also, there is a designation of professional customer. If you enter 390 order per day, on average, over a quarter, you must claim Pro-cust status. You lose priority status, you pay higher fees at some option exchanges but you CAN enter orders on both sides of the market. If you claim this at IB, they will not allow you to enter two sided markets.

A broker dealer, registered MM, must make two sided markets on the exchange they are registered at, for the options they have registered for, and be a minimum size. However, they don't have to make competitive markets. BTW, these rules are not "federal or FINRA rules". They are exchange rules that they file with their regulator and the SEC, for approval. FINRA is only one regulator.

Send me an email if you want to discuss this further.I can give you a call tomorrow.

Bob

You are misunderstanding and should not be encouraging this type of idea.

OP's not trying to make markets. He
believes he can react to changes in underlying stocks fast enough to
pick off stale option prices. What he does not understand is, there of
dozens of super sophisticated and technology-intensive mms / HFTs who
are lightning fast to update prices, and/or arb out any errors or
stale prices. The idea that you can outrun them with a retail
brokerage account is just absurd.

 

[Sergio77]

Scalping stock options? Sure, there are many stupid and crazy option market makers you can profit from. Guaranteed road to wealth. But be sure it will be your own scalp.

@marketsurfer: You are wasting your time. it's their destiny.

 

[mmt]

Most people will lose money trading options.
But that is the same with futures, forex, shares (or any other instruments).
So going by that logic, nobody should be encouraging others to speculate.

 

[Sergio77]

Most people will lose money trading options.
But that is the same with futures, forex, shares (or any other instruments).
So going by that logic, nobody should be encouraging others to speculate.

This had to do with scalping options, not trading options in general. Trading covered call OTM options is a lucrative style but you need the money,.

 

[rmorse]

This had to do with scalping options, not trading options in general. Trading covered call OTM options is a lucrative style but you need the money,.

I have clients that scalp options but they prefer to do it manually. By automating the process it is very easy to fall into the professional customer category which increases costs and drops you in priority. To make money at it, you need low commissions and high volume. The rebates only add up with activity.

 

[mmt]

This had to do with scalping options, not trading options in general. Trading covered call OTM options is a lucrative style but you need the money,.

Trading covered call OTM options is similar to trading ITM put options.
Whatever they trade, most people will lose money.