rules on option limit price penny increment?

[newguy05]

i want to cover my 40x dba apr 35C short in my 401k. The contract has no bid with ask at 0.05. But fidelity won't let me submit a limit order for 0.01. See below for the message, is this a standard market rule to only accept orders in 0.05 increment for dba or something fidelity came up with? They are basically forcing me to cover at 0.05 and lose $160 for no reason. It's not the end of the world but like to understand who sets the rules for limit price increment #.

Trade Message
(018783) The Limit/Stop/Trailing Price entered is invalid for the selected option security. Please enter your Price based on the following guidelines:

Option orders placed with a premium of $3 or less can be entered in increments of $0.05.
Option orders placed with a premium of more than $3 must be entered in increments of $0.10.
A select group of options can be entered in $0.01 increments when the premium is $3 or less, and increments of $0.05 when the premium is more than $3. For more information, see Penny Pilot Program.

 

[FSU]

Quote from newguy05:

i want to cover my 40x dba apr 35C short in my 401k. The contract has no bid with ask at 0.05. But fidelity won't let me submit a limit order for 0.01. See below for the message, is this a standard market rule to only accept orders in 0.05 increment for dba or something fidelity came up with? They are basically forcing me to cover at 0.05 and lose $160 for no reason. It's not the end of the world but like to understand who sets the rules for limit price increment #.

Not all options are traded in pennies, many are not including apparently DBA. You may see a last price in a penny increment as some stocks/etfs will allow spreads to trade in pennies, even though individual options cant. In other products such as the spx and oex spreads cant trade in penny increments, but the prices used in the spread may be in pennies.

Even if you could trade this option in pennies, I cant imagine anyone selling it that cheap.