zdreg said:
please erase your post and let the OP and others struggle with it.
but now you need to edit the quote in your post.done.
thanks for the deletion.
Last edited:
TD Ameritrade and Think or Swim Option Market Maker Scam
- Thread starter tradelosses
- Start date
please erase your post and let the OP and others struggle with it.
but now you need to edit the quote in your post.done.
thanks for the deletion.
FSU,
I have never heard of this. You should know that the SPX crowd works differently than equity options. Your order might go directly to the electronic book or be touched by a broker 1st. Your order might have gone through a broker to get price improvement. If you have documentation of their electronic book having a auction process, I'd like to see it. I think they call that electronic book that bypasses the market makers Hybrid 3.0 and they charge an extra $0.20/contract to use it for SPX, SPX EOM and SPXQ options. SPXW are not charged.
I have never heard of this. You should know that the SPX crowd works differently than equity options. Your order might go directly to the electronic book or be touched by a broker 1st. Your order might have gone through a broker to get price improvement. If you have documentation of their electronic book having a auction process, I'd like to see it. I think they call that electronic book that bypasses the market makers Hybrid 3.0 and they charge an extra $0.20/contract to use it for SPX, SPX EOM and SPXQ options. SPXW are not charged.
Yes, the SPX trades differently from all other options. All the SPX options can be traded in the pit, but the regular monthly options are traded a bit differently. For "professional" orders in the monthly options the orders are sent directly to a broker in the pit. For customer orders, the brokerage house can decide whether the orders are sent directly to a floor broker or to the electronic book. Usually this is based on the size of the order. If it is sent to a floor broker, he will yell the order out to the crowd for a fill/price improvement. If it is sent to the electronic book the price will be potentially improved from the current quote through SAL (simple auction liaison)
If the order is in a weekly, quarterly, or end of the month option, it will be sent directly to the electronic book
The same thing is true for spreads. The electronic auction process here is called COA (complex order auction)
Here is a link to the CBOE explaining the process.
https://www.cboe.org/hybrid/pia.aspx
I really like the ToS platform and have never felt cheated on options. Just today I sold to close puts on SMTC which I bought for $0.45 sometime ago. This stock has no liquidity and immediately the bid dropped to $0.20 when I tried to close the trade because I realized it was not liquid. So I sat on it. Just today the stock tanked and the bid/ask went to 0.45/0.70. I almost sold at 0.45 but decided to set sell price at 0.60. I got filled immediately. Net win trade for me but it sure stressed me out for a week or so.
Nice to know that you like TOS, but your execution had nothing to do with the platform. You got filled at a fair price because you worked the order well and a MM or customer found value at your price. Take some credit.
I think everyone is in agreement that you got filled at the market, using NBBO, so not a scam, even if you didn't get the fair price at the MID.
However, there's a scam in the options world, that people should be aware of. I use both TOS and IB and I've only experienced this with IB and its Market Maker. It happens when you place a credit spread order (or multi-leg options strategy, usually when collecting a credit like selling condors), say you have a 2.50 wide spread and your short leg NBBO is 1.05/1.15 and your long leg is .25/.35; and you place a LIMIT order for .75 credit; you get filled at your spread price of .75, so far so good; but your individual leg fills are off by over $5, way outside the NBBO, something like: short leg 5.60, and the long leg at 4.85.
This might seem like no big deal, but if you're doing 10 contracts and you were willing to part on the .35 on the long leg (hedge leg w/high probability of expiring worthless), thinking you had paid $350.00; now that has become $4,850.00. And if you manage the _legs individually_ for profitability, you will get burned when getting out because of this huge disparity in price. The individual legs now have a lot of risk, and creates a opportunity in price for the Market Maker. Now that's a SCAM!!!
What's the problem here? You manage each leg for profitability only to maximize the profit of the entire structure. One legs loss is another's gain. Or is this about "being right."
Are you kidding? If you sell a spread for .75, it doesn't matter what the individual prices of the legs are, as long as you are selling the spread for .75. 5 and 5.75, 1.50 and .75, its exactly the same.
it's about the MM taking the other side of the high prob leg (your long leg == MM short leg) at a price designed to make them a profit higher than the .35 you anticipated in risk on that leg.