99 shares takes presidency over all. My buddy said a trader could theoretically send 99 shares 10 times to get 990 shares even when the specialist shows 100. The order has to be sent as a market order
It's illegal if your intention is to fill a bigger order and break it up into odd lots for fast executions. I wouldn't be surprised if your buddy gets a phone call soon.
I would not even think of dabbling in some sort of odd lot scheme. I know for a fact that the NYSE is all over a couple of firms like white on rice. Ain't that right Tickerwatcher?
There are many reasons why you wouldn't/couldn't do odd lots like you describe. (1) S0-called "professionals" - which prop traders with Series 7 are considered - are NOT allowed to trade odd lots by NASD rules. That's why I can not send odd lot orders. (2) Odd lots can be filled at prices outside the quotes....which means you can get really bad fills. If you a retail customer with retail account, I dont see why you coldn't do odd lots...I mean, Im sure I can send 50 shares orders through my Brown account as many times as I wanted....at $5 a pop.
Probably a stupid question but since I can't remember doing many 100 share orders, are you saying, if the specialist is 1X1 can you get a 99 share fill at that price or are you saying that if the stock is 500 by 100 you could fill 99 shares against that 100 share offer a couple of time (realizing that it would get you in trouble). I guess my question is. Can you execute an oddlot against a 1X1 quote? My guess is no but I've never tried it, hell how many of us here trade odd lots? Will try it tommorow.
From now on I will use the API to break up every order into 1-share orders. With IB, the commision will be $1000 for 1000 shares, but that includes everything!
A market buy order for an odd lot will give immediate execution at the posted offer (no matter what the offer size is), and market sell order will immediately fill you at the bid price. I'm not 100% sure, but I've heard something that your odd lot order might even get executed at a better price than the NYSE bid/offer in case that there is a better price posted at a local exchange. You could also send an odd lot order to buy at the bid or any limit price below the offer, and that order will automatically be executed with the next NYSE print at your limit price or better. Thus, in a slow moving, wide spread stocks one could send odd lot order to buy at the bid and sell at the offer, and get his executions every time there is a print at bid/offer, and capture the spread. In a fast moving condition, one would use a market order for an odd lot to get immediate guaranteed execution, even if the specialist's quote is 1. All odd lot executions will come from the specialist's inventory, and are done automatically. Now, for prop. traders it's illegal (illegal is not the correct word, but you understand what I'm saying, it's not right) to use odd lot orders. One of my buddy prop. traders, who no longer is trading (quit about a year ago), had a personal vendetta going with the IRF specialist, and everytime he would see a good trade, and the specialist showing no size to get filled, would just send multiple market 99 share orders, until the specialist got pissed and contacted the compliance department of the firm. My friend didn't get fired, but got a pretty serious warning. I would warn all prop. traders NOT TO USE odd lots, unless they are getting rid of some partial fills from an ECN. Although personally I would get an enjoyment to have you guys piss the specialists off.