So I have a P DEC17 53 position for TARGET in my portfolio. Suddenly this morning it showed an impressive 3050% gain - I thought WTH?? Did TGT go out of business overnight? But then it showed that whereas the bid/ask is like 0.03$/0.06$ there was a transaction done at 0.63$ for a volume of 10. Ouch that must have hurt the person vaporised 90% of his money with one transaction.
Fat finger trades really hurt. Been there, done that and it's definitely not better to give than to receive. Also consider the possibility of bad data. That too occasionally happens.
I don't know (or, 'have a notion about...') the cause of the trade *entry*, but as far as market mechanics go, IB's TWS would have a hard problem allowing this, and although I'm an IB/TWS proponent, I don't think its set-up is all that unique: I don't think most option platforms would allow such trades so far from bid/ask. Now, in thinking further about it, what if the 3¢/6¢ market quote was 1x1 quantity? and the next Ask quantity is parked at 60¢x100 or something? Ewwwww! So, if you put your order in At Market, and got 1x6¢ and the rest at 60¢..... That would truly suck. (And would be in keeping with anybody's platform mechanics. Ugh.) Just FYI, there have been various price-phishing anti-manipulation maneuvers proposed, which to me, look *just*like* what I undertake daily, in testing the market for whether and by how much, I wish to trade a particular strike, spread, or expiry. I would hope that everyone reading this thread (and thereby showing at least a modicum of interest in the subject of option markets/prices/pricing) would keep their ears to the ground and stay informed about any such idiocy -- or we will all end up to be victims of the markets, rather than workers.
What are you referring to. ? With many options trading wide, what constitutes manipulation if you try to get a better price?
WOW! I was going to find some telling article on market manipulation -- thinking to choose the best from two or three, but if you google "market manipulation".... WOW. So, as you're looking through that deep-assed vein, keep in mind that half of it is being looked at for legislation/regulation. Oh. My. Gawd. What a mess that will/would be.
In my experience, fat finger trades are more likely with more illiquid equities in the pre/post market where the spread is Holland Tunnel wide and it overlaps a round dollar amount. In turbulent times (2008, Brexit, etc.), I will enter B/S orders with price alerts for adjustment early in the AM. Sometimes, in a fast market, you get a gift/donation.
%% Maybe TGT management did that; its still down for year with terrible earnings They probably meant to buy WMT/ fat finger. LOL
What happened here was the Dec 57/53 put spread traded at .12 on the Amex. The prices used where .63 and .75 on each leg. ( the .63 was the price you saw). When spreads trade on certain exchanges they use prices between the quoted prices on that exchange, but sometimes the prices will be outside of the ranges of other exchanges. You would never have been able to sell your option at that price.