Specialist system and alternatives....

dcunited · May 21, 2004

This one caught my attention as well. I can see how an underlying stock with a fair amount of open interest would be affected by vigorous option trading, but it's not like IBM is the only stock out there that guys put on large option positions and hedge with the stock, what makes, or could make, IBM the exception?

(I'm probably missing something, as usual)

"Better not take a dog on the space shuttle, because if he sticks his head out when you're coming home his face might burn up"

J. Handy

Don Bright · May 21, 2004

Quote from GATrader:

Don, padon my naivete but could u elaborate a little bit on the guys at CBOE controlling IBM? In this day and age of huge $ distributed amongst hundreds of hedge funds, how could "CBOE guys" control a widely held stock. I could see a small stock or cocoa/sugar/palladium but IBM?

I think I better not elaborate except to say that many of the same people have been in that Pit for a long, long, time...and that they have a lot of money, and they see all the order flow from the big institutions and can trade virtually risk free and (generally) in unison.

Don

JMartinez · May 21, 2004

http://hunter.tradeoes.com/

You can check your listed execution with it.

Don Bright · May 21, 2004

Quote from Steelhead:

how about expiration in general for big caps?
does it really have a big influence? how about if the price of the underlyer is somwhat close to a highly concentrated strike?

Today was a perfect example....the published imbalances before the opening showed a clear upside bias...and as of this second, 29 of 30 Dow stocks are up. This reflects the "short call, long put" leveling off. (first thing to look for).

Now, we use to see stocks "go to the strike price" most of the time on expiration...but for the last few years, big instituional firms and bigger traders realized that if they keep the stocks away from the strike price, they reduce their risk considerably. Out of about 200 stocks, we usually have 4 or 5 that we have to worry about being assigned on for any given expiration.

Don

Don Bright · May 21, 2004

Quote from Steelhead:

also how often do the specialist and clerks rotate?
thanks

That's a good question....
I'll make a couple of calls.

Well, that was easy...here's what I found out.....

Since 1987 or so most of the posts are "Corporate" and, as in most corporations there is movement of personnel. So, if you have a SLK post for example, with 1 Specialist and 2 clerks....they learn to work together well. Various posts will "cover for one another" for vacations and the like...and the "clerks" act as "assistant specialists"...a very good job.

So we have a pretty standard "corporate ladder" within each post, which explains why some stocks trade the same for years. One guy teaches another, they retire, move up, and start again.

Andre' is having a 'live chat' next Wednesday, maybe we can get into more details about the NYSE if you all want to.

Don

Don Bright · May 21, 2004

Quote from JMartinez:

http://hunter.tradeoes.com/

You can check your listed execution with it.

I tried this, and entered the data from one of my executed trades, and it came back "no data found" ....is this only for orders executed via OES?

If it tracks every trade, and is available for free, it's a nice tool!

Don

Nordic · May 21, 2004

Quote from Don Bright:

I think I better not elaborate except to say that many of the same people have been in that Pit for a long, long, time...and that they have a lot of money, and they see all the order flow from the big institutions and can trade virtually risk free and (generally) in unison.

Don

Don, quit inhaling that cigar dude. "traders in the pit a long time...............lot's of money".....That's controlling the stock? Now I'll agree they edge as far as seeing large option orders coming into the pit, but generally their just laying off stock "delta" against their positions.

JMartinez · May 21, 2004

Quote from Don Bright:

I tried this, and entered the data from one of my executed trades, and it came back "no data found" ....is this only for orders executed via OES?

If it tracks every trade, and is available for free, it's a nice tool!

Don

make sure the time is entered correctly ex: 09:35:01, you have to have the 0 in the front of the 9 to make it work. Also, there is a bug still that I haven't been able to figure out. But in general it should work.

Jeff--

JMartinez · May 21, 2004

Quote from JMartinez:

make sure the time is entered correctly ex: 09:35:01, you have to have the 0 in the front of the 9 to make it work. Also, there is a bug still that I haven't been able to figure out. But in general it should work.

Jeff--

Also, it check non OES orders as long as the order went to the NYSE. It checks against time and sales. It can eliminate lots of execution phone calls to DOT.

Don Bright · May 21, 2004

Quote from JMartinez:

make sure the time is entered correctly ex: 09:35:01, you have to have the 0 in the front of the 9 to make it work. Also, there is a bug still that I haven't been able to figure out. But in general it should work.

Jeff--

I'm pretty sure I did it right, but I'll give it another shot on Monday.

Don