Who is writing 1 or 2 or 3 unit option contracts?

[m22au]

I have had many fills with a group of smaller contracts - example 10 gets filled 5 3 2 11. I also recently looked at some time and sales data and was surprised by all the 1's and 2's and 3's.

Who are doing all these little contracts? What are the motives?

I'm finding it a bit difficult to understand your queries.

I regularly trade 1 or 2 option contracts at a time, and have for many years. I am/was unaware of any moral or legal requirement to trade a larger number of contracts for each trade.

Regarding your specific example of GS, at a share price of $209.37, a one contract trade represents a stock position on exercise/assignment of over $20,000 - which isn't a small amount of money.

 

[Bekim]

There are smart spread algorithms that will fill orders 1 at a time rather than a bunch at once.

 

[Kammo]

I often get fills comprising batches of little fills with Robinhood, but not with other brokers. I trade spreads.

 

[DallasCowboysFan]

I trade a lot of calendars.

On some high price stocks like BKNG, where a simple long call can cost 80 ($8,000) per lot, it's understandable to see why most orders are for very small sizes like 1-2 lots.

How do you find your calendars?

TDAmeritrade has a link that suggests several calendar spreads but I have never traded them.
Do you follow the suggestions of others or do you find your own?

 

[ffs1001]

How do you find your calendars?

I have been very actively trading calendars for 2 years - I find my own, using the techniques that I have learnt in this period. Without going into details, I use a variation of the techniques practiced at Steady Options (subscription service).

I have been successful with these cals on a regular and consistent fashion. However, the drawbacks are (1) high comms (2) not possible to scale up to a 6-figure portfolio (3) very time consuming - not so much of an issue for me as I trade full-time, but if I had a day-job, then I wouldn't be able to do it.

 

[TommyR]

to check who is buying it sherlock

 

[ironchef]

I have had many fills with a group of smaller contracts - example 10 gets filled 5 3 2 11. I also recently looked at some time and sales data and was surprised by all the 1's and 2's and 3's.

Who are doing all these little contracts? What are the motives?

My non professional guess is that those (we small mom and pop retails trade against) nowadays are algo driven?

 

[FSU]

There are a number of reasons your 10 lot order may be filled in smaller increments. The most likely would be the pro-rata fill rules at an exchange. For example when your order is routed to an exchange, the DPM may be guaranteed a certain percent of the volume. The rest is split up based on the size quoted by other market makers. So in your example of the 10 lot, the DPM may have gotten the biggest cut, while the rest of the order was split among other MM's.

 

[ZBZB]

I have been very actively trading calendars for 2 years - I find my own, using the techniques that I have learnt in this period. Without going into details, I use a variation of the techniques practiced at Steady Options (subscription service).

I have been successful with these cals on a regular and consistent fashion. However, the drawbacks are (1) high comms (2) not possible to scale up to a 6-figure portfolio (3) very time consuming - not so much of an issue for me as I trade full-time, but if I had a day-job, then I wouldn't be able to do it.

Take the trial at www.poweropt.com to see if that will help you find more spreads.

 

[ffs1001]

Take the trial at www.poweropt.com to see if that will help you find more spreads.

Thanks ZBZB. I registered today and had a look, and sadly, there is not much there for me.