Mostly because of this horror story: Does CME bust trades too? I understand April 9 2025 was a rare event but stil.....
Yes. Search Labs | AI Overview The CME Group (CME) has rules in place to address errors that may occur during trading, including those deemed "obvious errors" . Here's a summary of the CME's approach to obvious errors Definition: An "Obvious Error" refers to a transaction with an execution price significantly outside the prevailing market conditions, specifically a price that is higher or lower than the theoretical price for the series by a predefined minimum amount. Purpose: These rules aim to balance the need to preserve market integrity by correcting erroneous trades while maintaining some certainty for market participants who execute legitimate transactions. Types of errors: Examples of situations that might lead to a transaction being considered an Obvious Error include: Erroneous prints disseminated by the underlying market. Erroneous quotes in the underlying security, where the bid/ask spread is abnormally wide. Verifiable disruptions or malfunctions of Exchange systems that affect order execution or information dissemination. Cases where a trade price is outside of the "No Bust Range" for a futures contract or the "Bid/Ask Reasonability Allowance" for an option contract. Resolution: When an Obvious Error is determined to have occurred, the trade may either be: Adjusted: The execution price of the transaction is adjusted to a price consistent with the prevailing market conditions. Busted (Cancelled): The trade is nullified and essentially erased from the trading record. Specific considerations for Customer orders: If at least one party to an Obvious Error is a customer, the execution price is usually adjusted rather than nullified unless the adjustment would violate the customer's limit price, in which case the trade is nullified. Process: Parties believing they were part of an erroneous transaction must notify the exchange's officials within a specified timeframe. An Exchange Official determines if an Obvious Error has occurred. If an Obvious Error is confirmed, the official decides whether to adjust or bust the trade based on established rules. Decisions may be reviewed by an Obvious Error Panel, which can overturn or modify the official's action. Important Notes: No Bust Range/Bid/Ask Reasonability Allowance: The CME Group defines specific ranges or allowances for futures and options contracts. If a trade falls outside these parameters, it may be considered for adjustment or cancellation. Liability: The party responsible for entering the order that results in a price adjustment or trade bust may be held responsible for the demonstrated losses of other parties involved, provided those parties took reasonable steps to mitigate their losses. Deadlines: There are specific deadlines for filing claims related to losses incurred due to price adjustments or cancellations. Arbitration: If a claim of liability is denied, the party making the claim can submit it to arbitration in accordance with CME Group rules. In essence, the CME's obvious errors rule aims to provide a mechanism for rectifying trading errors that deviate significantly from fair market value, ensuring a degree of fairness and orderliness in the marketplace, according to results from Nasdaq Trader.
Fallacy. Don't watch YT idiots. I do remember your BS about trading SPX synthetics so I am prob wasting my time... Anyway, SPX is cash settled so trade (SPX). If you're trading term structure (calendars) then trade ES.
Sum it up in your own words. I ain't watching no damn social media video. I'm convinced everyone on social media are jackoff 2bit clowns
I wouldn't even know what options are without YouTube. Even if you just use search engines and LLMs you are still scraping data from social media. Choices are very limited in 0 DTE offerings. If they would offer it on single stocks then there wouldn't need to be so many share splits.
I believe that the CBOE is going to roll out 0DTE single stock options later this year. It was going to be based on the liquidity of the weeklies. So I'm sure PLTR MSTR FAANG etc. dailies are coming soon. CME said they were going to roll out single stock futures but this has been tried & failed before so I don't know if it will ever have enough liquidity for trading. It could work for investors who want leveraged positions years out. It would probably be cheaper that LEAPs. Bitcoin, Ethereum & Solana have futures but they are still illiquid. BRR (Bitcoin) still doesn't trade much even after 3 years.
The whole story is just a good example of operator error. He had a defined risk position (a short call spread) and decided to break it by covering the short calls, and later on closing the long calls and that was the beginning of the end for him, once the covering of the short calls got busted (due to catastrophic error with the trade) he got unlimited risk as he ended up with those short calls only at expiration with the market substantially above the strikes. His story is also a great reminder to double-check your fills all the time. He managed to buy those calls at $1.2 when the fair price was around $17, which is way beyond the threshold for catastrophic error (in this case, CBOE has it at +/-2.0 from fair). So when you get a fill that is too good to be true, assume it is. Had he traded the spread as a whole, he would have been protected because even the busting of those 4 calls would have busted the whole trade (meaning he would have kept the defined risk call spread at expiration).
The other advantages are that if the options get illiquid you can trade the underlying and it won't ever go HTB.