both sides on one option contract

Discussion in 'Options' started by heilbronner, May 2, 2003.

  1. Please tell me the reason why I can't place a buy and a sell order in the same option contract at the same time?
  2. Because if you were to do so worlds would collide. You see, "Buy" heilbronner would then be in direct communication with "Sell" heilbronner. A Buy trader cannot co-exist with a Sell trader in the same room, heaven forbid in the same body! It is like trying to combine matter and anti-matter.

    Actually I am not an expert on this subject but would refer you to George Costanza (pronounced Can't-stand-jya) who is intimately versed in the Colliding World's Theory.:)

    Barring that, it is prohibited by one (?) of the regulating bodies. Uhh, I remember reading the rule somewhere - it does exist.
  3. ...A Buy trader cannot co-exist with a Sell trader in the same room, heaven forbid in the same body! It is like trying to combine matter and anti-matter...

    It is possible. There is a bull and a bear inside my heart, they live in good harmony and so profits are made. Never heard of YING and YANG, Bluehorseshoe?
  4. Apart, if I can't scalp in the same contract, I will use different strikes to do so. :p
  5. Living in Taiwan, Republic of China, thus livin' and breathin' the Yin & Yang, and probably all the other nasty bugs floating around!

    Re: colliding worlds: purely a Seinfeld joke, no relevance whatsoever to trading or your question. OCC (or another entity) prohibits posting buy and sell orders on both sides of a specific options contract. Certainly someone will post something more specific before long ...
  6. Actually, it is the option exchanges and not the OCC that prohibits this to protect the interests of their own member firms (i.e., the market makers and specialists).
  7. I think there's an older thread with more info, but... basically, it's against the rules. I've never even tried it.

    Here's the rub. Many specialists, if they don't take your bid/offer yet it's within the bid/offer spread, will display it. Today, someone has been continually bidding a 1-lot on one option that I'm trying to sell, at around .15 higher than the next best bid. I'm trying to sell my options, 5 or 10 at a time, and occasionally I decide to hit his bid, and the order is getting filled for my full amount. The order is not going to his exchange (the broker I have these options with isn't direct access and presumably is giving them to the exchange that'll pay them for order flow), but the exchange is filling my orders anyway (presumably rather than locking the market.)

    If the guy with the 1-lot were me or someone colluding with me, it would represent an unfair (in the rule-makers' opinion) way to get a better price.
  8. amex wont let you be on both sides of their stocks either.
  9. Well, if you are guaranteed to make money this way, then I think you will not be able to do it any more very soon.

    Stay away from options. With the same amount of effort and more commitment that you put in such as capital, analysis, time, and risks, you have much better chance in stocks and futures.