And how may "non-serious" ones are out there?
AZD
SPX Credit Spread Trader
- Thread starter El OchoCinco
- Start date
And how may "non-serious" ones are out there?
AZD
So, they are basically able to trade among themselves to balance out positions?
AZD
Sorry to be a "question hog" today. 
I'm having a bit of a problem understanding some of the mechanics of the SPX contracts and the way the "hybrid system" works.
Without revealing my broker - I've been trading SPX options for a long, long time. In the past couple of years, meeting between the B/A has become more and more difficult. Besides that, I have occasionally been having a problem with quick executions.
For example, with some of the spreads 1.60 wide, I try to meet in the middle. Lately, I've seen bids or offers that were in the middle. For example, a quote at 16 x 17.6 and then 16 x 16.8, where you can tell from the size, the 16.8 on the offer is someone trying to meet in the middle.
So, I place the order and it sometimes takes a minute to fill!!!
This is not a late trade report as sometimes if the market moves, so does the quote, and I don't get the contracts.
The explanation I get is that order must have been taken down to the floor. Why would this happen? Sometimes my orders fill immediately.
Can anyone explain how this hybrid system works? Or is my broker just inefficient?
Thanks in advance.
AZD
I'm having a bit of a problem understanding some of the mechanics of the SPX contracts and the way the "hybrid system" works.
Without revealing my broker - I've been trading SPX options for a long, long time. In the past couple of years, meeting between the B/A has become more and more difficult. Besides that, I have occasionally been having a problem with quick executions.
For example, with some of the spreads 1.60 wide, I try to meet in the middle. Lately, I've seen bids or offers that were in the middle. For example, a quote at 16 x 17.6 and then 16 x 16.8, where you can tell from the size, the 16.8 on the offer is someone trying to meet in the middle.
So, I place the order and it sometimes takes a minute to fill!!!
This is not a late trade report as sometimes if the market moves, so does the quote, and I don't get the contracts.
The explanation I get is that order must have been taken down to the floor. Why would this happen? Sometimes my orders fill immediately.
Can anyone explain how this hybrid system works? Or is my broker just inefficient?
Thanks in advance.
AZD
To clarify, on the previous example, I place the order to buy at 16.80.
AZD
AZD
My original trade observation -
LOL. Just happend again a few minutes ago.
450 contracts of 1340 put @.50
450 contracts of 1360 put @.70
AZD
Thanks for the input.
So, who do the MMs sell to so that they may balance their positions?
How many MMs, for example, are doing the SPX contracts?
AZD
In the old days, they might trade with each other, but not preferred not to do so. These days, very few MMs are independent. When they take down a trade, the firm's upstairs traders hedge the deltas, vega, gamma etc.
All I meant before is that the MMs who take down this trade are in position to sell put spreads or just puts to whomever may be bidding. They may even know where to show trades they would like to make. I'm sure they know who the premium buyers are, and when they have premium tos ell, they cam show stuff.
I have no clue what the real order flow is like on the floor. But there are portfolio hedgers who must buy premium, and big premium sellers know where to find them.
Mark
So, who do the MMs sell to so that they may balance their positions?
How many MMs, for example, are doing the SPX contracts?
AZD
In the old days, they might trade with each other, but not preferred not to do so. These days, very few MMs are independent. When they take down a trade, the firm's upstairs traders hedge the deltas, vega, gamma etc.
All I meant before is that the MMs who take down this trade are in position to sell put spreads or just puts to whomever may be bidding. They may even know where to show trades they would like to make. I'm sure they know who the premium buyers are, and when they have premium tos ell, they cam show stuff.
I have no clue what the real order flow is like on the floor. But there are portfolio hedgers who must buy premium, and big premium sellers know where to find them.
Mark
Thats easy...Coach Phil is at it again
Quote from arizonadreamer:
And how may "non-serious" ones are out there?
AZD
it's easy to tell the serious ones from the wanna-bees. The real thing are the ones with the big smiles on their faces knowing they have a gazillion bucks from the big brokerages underwriting their trading. I'd imagine that a lot of these guys don't even think twice about dropping a million or more to get the market going with a large order.
TS
You are way off base (as usual).
The days of the wealthy market maker are over. It's a very difficult game these days - so difficult that there are few independent market makers left.
As to 'getting the market going' MMs are not big enough to do it. Not with gigantic hedge funds and other fund managers able to shove any MM orders down the MMs throat.
Mark
so....I'm thinking the bull run can't last much longer, it's gotta drop, at least by May right?
I'm thinking of selling a March/June SPX or RUT put diagonal spread pretty far OTM and sell Apr and May too, with the expectation that it's gonna drop like crazy sometime around May at the latest and when it does, cash in the June. thoughts?'
My thoughts have been turning to these ideas as the last couple ICs and verts have been pretty low % return and tougher to fill where I want them to.
I'm thinking of selling a March/June SPX or RUT put diagonal spread pretty far OTM and sell Apr and May too, with the expectation that it's gonna drop like crazy sometime around May at the latest and when it does, cash in the June. thoughts?'
My thoughts have been turning to these ideas as the last couple ICs and verts have been pretty low % return and tougher to fill where I want them to.