Are Options FIFO?

metooxx · Oct 26, 2002

Originally posted by aphexcoil
Let me just clarify this so I know.

There is an option with a spread of 3.60x3.80. I want to buy 5 of them at 3.70. So, I put up one contract for sale at a new ask at $3.70. I then immediately see 10 contracts available, and buy 5 of them.

Is this illegal?
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Absolutely ...

metooxx · Oct 26, 2002

Originally posted by nusrat

Are options FIFO? (especially for limit orders)
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Sort of.

Retail has precedence; however we see FIFO violated everyday...

metooxx · Oct 26, 2002

Originally posted by aphexcoil

Ok, what about this.

I use my IB account to put an order in to lower the ask or raise the bid. I then use a totally seperate account (let's say my neighbors) to hit that new ask or bid.

a) Is that illegal
b) How would they know (investigation?)
c) Don't people do this sort of thing with stocks all the time?
d) If the two accounts are different, how would either of the firms internal systems detect anything amiss? As far as IB is concerned I'm just trying to buy an option at 3.70 instead of 3.80 and as far as the other firm is concerned, someone else just sold 10 contracts at 3.70 because there was suddenly an offer to buy at 3.70
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That is small lot baiting; and you haven't even figured it out yet.

a) Yes;

b) They scan for it;

c) Yes;

d) They wouldn't, the exchanges would.

You are on your way to deep shit; because I know you are going to try it ...

metooxx · Oct 26, 2002

Originally posted by aphexcoil

I've done a search on Google and nothing came up for "small lot baiting." Where can I get more information about this? How am I supposed to know this is illegal to do? Where can I find a list of things that are acceptable to do in trading and those that will get you in deep shit?
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That type of information is not broadly disseminated ...

metooxx · Oct 26, 2002

Originally posted by nusrat

See the REDI page:

a) Maybe, if the SEC considers it to be "manipulation". Definitely forbidden on REDI page, which says "or any other account where the trader has a beneficial interest".

c) I'm shocked, SHOCKED!

In general . . .

High-volume traders risk being caught by pattern-matching software which scans T&S.

For little fish . . .

If they're just accounts in the same name (SSN) at different brokers, I think it might be caught by the *clearing* firms, which could correlate all accounts for the same owner.
Might be a different answer if the accounts are at two different brokers which use two different clearing firms.

For accounts in two different names and SSNs, probably would never get noticed if you're small.
But you still have a 0.00001% chance of having a REALLY bad day -- the kind of situation where "they" are actually after you for a completely different reason (like an IRS audit), but once you attract their attention, they take apart your life piece-by-piece as a way of getting more leverage on you.
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Yes you will get caught and you haven't even figured out it is a game of dollars not nickles ...

metooxx · Oct 26, 2002

Originally posted by TonySanDiego
There has still not been an answer to the original FIFO question.

I would guess that the answer would have to be yes.. but stranger things have turned up.

Thanks in advance for an answer.
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See above ...

aphexcoil · Oct 26, 2002

Originally posted by metooxx

Yes you will get caught and you haven't even figured out it is a game of dollars not nickles ...
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You underestimate my intelligence.

metooxx · Oct 26, 2002

Originally posted by aphexcoil

You underestimate my intelligence.
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OK ace; tell me how it is done.

aphexcoil · Oct 26, 2002

Now if I figured that out, why in the hell would I announce it on this board?

I'd PM you instead.

Are you suddenly becoming more prolific lately because I'm getting close to something?

metooxx · Oct 26, 2002

Originally posted by aphexcoil
Now if I figured that out, why in the hell would I announce it on this board?

I'd PM you instead.
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That will work.