It is not that you will receive better or worse quotes as that would be illegal - the quoted price is the same. The difference is that no one will bother with a 10 lot unless they get more edge or you get really lucky, which is why your order will end up in the book and eventually fills when a MM hits your order for lots more edge. If you raise your size to 100, someone may fill you, but it won't be at a better price than if it were a 10 lot or 2000 lot. BTW, 100 is small. The point is, if you send in small orders through a broker like IB, the smaller your size the more on mid or even the other side of mid you have to be to fill with a MM. When you are trading small size, it is sometimes other retail traders you are often trading with. You answered your own question. Sometime, go down to the CBOE floor, stand next to the IWM/RUT/NDX pit [they are essentialy one pit] and then go to the S pit. It is not even close. The demand is so great for the S, the CBOE was going to swap the S into the OEX pit because the OEX pit is bigger and there is no one in there. For some reason, that was halted. nitro
What kind of size is " required " to get descent fills (spreads). I thought 100 lots per leg was ok because it's approx. the average trade size for SPX. Could you give some tips to get a nice executions on SPX? with all the stories I have read it's rather difficult
I can't answer all your questions since I have to get back to work. Seriously, call XFA or Lakeshore, and ask them these questions. Spreads are probably easier to fill as a retail trader. Study the COB and RFQs. nitro
Just to add to what nitro posted, I do a ton of SPX business with XFA, theyâre an excellent group. IMO, as someone who does a lot of business in the SPX its not really a product for the retail guy, youâre better off using a similar product with electronic access. As was mentioned itâs the last of the really big contracts which is not multi listed. The S and P has a licenses with the CBOE which so far has kept it from being multi listed. Someone else mentioned things like the Qâs and one other, theyâre nice broad market indexes which are much more retail oriented. The ISE surpassed the CBOE in volume a few years back and the PHLX is eating into the CBOEâs number 2 status. The Qâs were originally a single listed product on the AMEX and thatâs when it was fat city to be a MM In the Qâs.
ES is $25 per point, while SPX is $100 so a spread of 0.50 in ES is the same as the spread of 2.00 in SPX.
ES is $50 a point, but the dollar value per point does not matter. A 15.75/16.25 spread is always better than a 15.00/17.00 spread.
who trades at bid/ask anyway? enter a limit order somewhere in between and you'll get a fill. the best product depends on your trading strategy. you should try all of them (spx, spy and es) and see what's best for you. obviously if spy & es were the end-all, then spx wouldn't be around but it's still here and i believe it's still the top option in dollar volume in the u.s.
You won't get a fill on your limit order until the market moves against you and the market makers can make a profit.
Thats the basic premis in options market making no matter what the product. Naturally in the SPX its looser since its a single listed product. No market maker in any product is looking to just trade for fair value.