while i have some sympathy for the tough times market makers are going through, the fact remains that the method of options trading in the states is dated. The ISE has proven that market makers can make markets and honor them. Hopefully BOX will take it one step further. Trading firms/exchanges that are reluctant to adapt to the automated market will most likely lose their order flow to more efficient markets. It happened with NASDAQ and is happening with US options. while you say it is embarassing as you believe the people posting have no clue, you should try to remember who is sending you your flow. Then again, these guys seem to have smart flow and I would venture a wild guess that you'd prefer their volume go elsewhere.
Def, I agree with you, that is the real issue, the option exchanges have always made their money on "dumb order flow", the recent rule changes: 1) no off floor market making, can literally be applied to any active trader; 2) cancel fees, structured in such a way that only a few firms would fall under the restrictions, i.e. Preferred, IB, SLK, etc.; 3) manual intervention rules, impossible to enforce, except against an identified large volume trader; 4) 15 second rule, meant to slow down off floor traders, 5) and the oldest, B/D prohibition, the original "smart order flow" the time has come to open the option markets to all players, level the playing field by changing the recent regulations, either by repeal or more than likely the economic pressure of alternate trading venues, and honoring markets put up by professionals. Whether a retail customer, off floor professional trader or a market maker, if you post a size and a price you should be forced to trade it.
Ohh poor baby. What's the matter, kitten? Can't pay your rent on what I am sure is a palatial estate? I find your statement to be one of the most obnoxious statements I've read here. We (retail/prop) don't whine/bitch/cry every time we take a loss. And here is Mr. Pro crying about taking a beating on airlines... The reality is that most of you couldn't survive if you were forced to play by the rules.
I trade options because they got a lot of leverage but not on the short side with those high margin rules.It wasn't long time ago when the Cboe had 5% margin requirements on short options.May be BOX will impose better margins on short options.Can some one comment on this topic.
Extremely unlikely that the Federal Reserve and the SEC will allow the BOX to have option margin requirements less than the other 5 options exchanges since the contracts will be fungible among the exchanges.
Margin requirements would have to be the same for all exchanges. Risk based (market maker margins) x2 would seem reasonable. This is just a dream at this point. Current system punishes some low risk hedges with outrageous retail margin requirements. Long in the money call short stock is an example that comes to mind. Perhaps BOX could allow professional customers to register as Broker/Dealer and thereby qualify for market maker margins.
and a partridge in a pear tree. Trade with no commissions, and the people are grrrrrrrrrreat!!!!!! And really friendly. Cmon, how about CBOT grain options. 50K haircut, multiple leasable seats available, only a few hundred $ each month. You can sell nickel puts all day long and pick off all that stupid retail paper. They're only worth a penny on your sheets kitten. You capture 4 cents of edge. It's free money, right!!! You'll be rich, rich, rich, and fulfill all your dreams. Then you can hire an exotics clerk and pay him 100k, write a book on day trading and retire. I'm sorry guys but some of these posts are just irresistible. It's obvious who has been around the block and who hasn't. I've been on vacation, now back to work, it's been great. I look forward to sharing some of the posts. Bye Nicholas
A lot of this thread concerns trading disparities in option prices. If box comes out with true time/price priority will there be market makers willing to shrink spreads down enough (.05?), to increase liquidity? Is that what this thread comes down to? Without the liquidity spreads wont decrease any, and the only question is who gets to take the spread? For 2 years i tried to trade moves in equities, using options for leverage. I finally realized i would never overcome both the large spreads and the time decay. Small spreads and liquidity would change everything. I would want to use a realtime options software, if I actually thought i could get filled for fair prices. Anyone suggest anything? Would also need a good trading platform to get in and out quick. And fair fast cancels. Can spread orders be entered online with I.B.? Is it possibe someday spread orders could be done electronically? Does anybody use a direct access option broker other than IB, if so how is the platform? Maybe SSF makes this a mute point for equity speculators.
braye, here are two comment letters from IB/Timber Hill. The letters are a year old so some of the references maybe dated. Nevertheless, they do explain why IB/Timber Hill think many of the new rules put in place are unfair. http://www.interactivebrokers.com/download/comment13.pdf http://www.interactivebrokers.com/download/comment14.pdf After you read the letters and still complain that my comments are clueless and those of our chairman's are wrong, that is fine. Time will be the deciding factor. (although you did mention in another post "But, Mr. Peterfy is a genius and Timber continues to be profitable. ..... But, again, Peterfy has always been ahead of the curve, and only uses these people as foot soldiers and information providers") the opinions i've been stating are pretty much in line with the firms and according to your comments a genius who is ahead of the curve. But since i've been implicitly described as a foot soldier, I might as well take a feeble attempt at defending myself with the question: Is it the mark of a genius to put clueless people to set up and run their overseas operations? Then again all I do is come into work, flick a switch to turn on the trading of a couple hundred products in multiple market sectors. Now if I wasn't so stupid, i'd figure out how to do it remotely from a golf course.