Buying @ bid - possible?

Discussion in 'Options' started by dis, Jun 24, 2002.

  1. dis



    Let us say an option is quoted $2.50 bid/ $2.55 offered, then the spread widens to $2.45/$2.55 and I manage to place a limit buy order @ $2.50. Later, a MM raises his bid to $2.50. Another word, we both bid $2.50, but I was there first. Who gets the first fill at this price?

  2. tntneo

    tntneo Moderator

    you may be filled at the bid.
    However it will rarely be because you have an advantage (for the options I trade).
    Maybe the way to look at it is this : if you want a price and not more, send your limit order and you might be filled at the bid (if that's you). But the fill is likely to come if they want to go lower anyway (yep). So, OK to get a max price, but not to 'get the spread' (I don't think that's what you try to achieve anyway).
  3. ktm


    I get filled there some. You have to be patient. I've seen 100 showing at the bid and I add my order for 1 and the displayed bid is 101...then 5 go off and I get filled. Amazing.

    Other days I get displayed as the lone bid and 50-60 may go off and I don't get any and then the market moves away from me.

    I think it all evens out in the end. You can definitely buy at the bid if you're patient.
  4. When ever I'm able to buy at the bid, I get very nervous because I think I don't know what the market direction is and I'm not the wrong side.
  5. Sure you can get filled at the bid: if the option price is going down! If it IS going down, you will be the FIRST to get filled.

    Give me a break guys....Why would you want the option if the MM is giving it to you at the bid? The stock (& options) is going down. Its the same thing with stocks..I dont want the stock if Im getting filled at the bid (unless you have a special reason for wanting the stock at those prices).
  6. def

    def Sponsor

    Without writing a disertation on why I think you're wrong I'll give a few examples and stop there.

    1. Legging into a spread.
    2. If someone else wants to sell (does not have to be a market maker).
    3. hedging other positions
    4. different opinions on vol
    5. different positions (ie. if i'm long 1000 options i might be more inclinded to sell)
    6. there is more than 1 MM - and beleive it or not they actually trade with each other (ie. they are hitting each others bid/offer)

    i believe price time priority exists at the ISE. my point is with 5 exchanges falling over each other fighting for option flow, there is a greater chance than ever of getting a decent fill.
  7. I guess there is a technical distinction here between putting in a limit order at the current bid and it getting filled eventually, and actually buying at the bid, which of course retail people can't actually do. I seldom daytrade so I often put in limit orders at the bid or even a bit lower hoping to catch an intraday downswing and then hold for a few days or a few weeks to sell at a profit. Frequently I get filled but I have never been watching a limit order and actually seen it get filled at the bid, usually somebody will sell at the bid, the bid drops and then the person making the market may sell it to me for 5-10 cents more than they just paid a few seconds before.
  8. This matches my experience. It's very unlikely you'll get filled at a BID limit, unless the market is going down.

    The option MM's just don't seem to allow anyone to hit your bid or market orders in even high volume options are rarely used. Don't know why, but if you want in, you generally have to pay the spread in my experience.
  9. put simply, yes.

    You can step ahead of the MM, but not other customer orders, if there are any at that price. There is a size just like on listed stocks. First come, first serve. And of course, some one else needs to hit that bid. No MM is going to fill you at his own bid just out of the kindess of his h.. er uh, big empty whole in his chest :p

    There are people that make a living of this. They're called scalpers.
  10. agreed.

    7. I am a scalper in a very liquid option and I plan on flipping it to the ask as soon as I am filled. (they are trying to crack down on this though).
    #10     Jun 26, 2002