@smallfil, can you show us an option pricing model that for this Put can give such a price that is above the strike of $2 ? Just to verify the said prices... You can even set the IV to 1000 or even 10,000, or to infinity - 1 ... And: I was meaning the strike 2 in the first picture, ie. ticker VERU. But above you used the strike 2 of the other ticker. But yes that one uses an illegal price as well. Really, I would be ashamed to give such a justification, because it's... ups... ashaming... Then maybe I'm having the wrong genes/culture/professional ethics/morale/life ethics or so...
You can look for an example yourself. Sorry, I already gave you solution to the problem. Huge waste of time and I am not wasting my time.
You behave like a classic loser The reason is: you can't give an answer b/c it's mathematically impossible to have a Put option with a premium > strike. Q.E.D.
Be an adult and grow up. You act like a child throwing a tantrum. The example, you gave is yours. I merely, commented on it.
I prefer exact answers to such problems, not your such wishi-washi "logic". It's about some criminal MMs committing financial crimes, nothing less.
Option MMs generally run their own values. That is to them what fair value is. Then each exchange they are a member of has a quoting requirement. When I was on the AMEX, you need to stream a certain percent of the strikes with a minimum size of 10x10 and no more than $5.00 wide. On the active options, ATM and OTM in more liquid names with lots of option flow, to participate you need to be on at least the Bid or ASK or both. I might decide to bid/offer looking for $0.03 around fair value. Just an example. So, if an option is worth to me, $1.00, my system would send out a quote $0.97 x $1.03 10x10. On the other options, you make wider markets, so you do not get picked off. If a put on the $2 strike is worth $1.00, my system would generate a quote of 0.00 x 3.50. $2.50 above and below fair value. You can't quote a negative value. If that option became active, I would tighten my market. Otherwise, I have no expectation that any customer would send a market order to buy those options and pay $3.50, which would be $1.50 more than fair value if stock price became $0.00. This is just the way the systems are designed. You are free to place an option order at a better price than the MM if you expect a customer would come in as a buyer. But to say the MM is doing anything wrong, as long as they follow the exchange’s quoting requirements, is not a fair conclusion in my opinion. I also expect that if a customer were to buy at that price, it would not be broken under current option exchange Clearly Erroneous Trade rules, but each option exchange has their own policy.
There are 16 option exchanges. Which one. You can try and contact CBOE or NASDAQ and ask them. Their phone numbers are on their websites. They all have trade desks.
Really 16? I was thinking just a few like CBOE and NASDAQ. Ok, got it. Just found this of NASDAQ and studying it: https://listingcenter.nasdaq.com/rulebook/nasdaq/rules/nasdaq-options-2
Tell our option expert that if a stock is trading at $2, and someone is asking $3 for a put, all one has to do is place an order to "sell to open" 1 put at $2. The ask will obviously drop, and the size of the ask won't be just one contract either... the machines will adjust in a millisecond and the ask size will be whatever... 150 contracts at $2.