Who is my Counter Party when entering a Credit Spread?

[ggrillea]

who takes the opposite side of my trade when I enter a Credit Spread?
-1 trader for the long options and a different trader for the short.
-The broker
-or just 1 trader who buys the premium from me ?

Basically I am interested in understanding the mechanics of how the broker routes/fills my order when I place a credit spread.


Thank You

 

[Robert Morse]

Spread orders go to the COB-Complex order book on the options exchanges. Most of the time, a market maker trades with you, sometimes a customer. It is executed as a spread, not two legs. After your trade clears, the counterparty is the OCC.

 

[tayte]

who takes the opposite side of my trade when I enter a Credit Spread?

Thank You

Legit brokers aren't legally allowed to trade against clients. This depends on how you work your orders. Do you leg into the spread, work a spread order, hit a spread quote, or did you do a RFQ?

 

[ggrillea]

Hi Robert,
Thanks for your clear and detailed answer.
The reason I am asking is that in the last couple of days demo trading I got a few "fills" that just seem too good to be true.

SOLD -3 vertical ADPT 100 16 Jul 21 52.5/50 @2.50
SOLD -3 vertical TSLA 100 16 Apr 21 590/585 @5.05

How likely is that to happen with real money?
Based on your answer I'd say 0 chance.

Thank You

 

[El OchoCinco]

Demo fills are not real

 

[GuerrillaTrading]

I don't think you should stress too much about mechanics but rather whether you are on the right side of the trade.

 

[ggrillea]

One last question. Is there anywhere I can check the volume of vertical spreads, straddles or condors traded on a particular underlying as a small retail trader using TOS, Interactive,Fidelity or TastyTrade.
Thank you all for the replies.