How do institutions buy/sell large amounts of options?

Discussion in 'Options' started by Pekelo, May 4, 2018.


    • Very vague post.
    • Could you be more specific?
     
    #21     May 5, 2018
  1. truetype

    truetype

    I have no idea what you're talking about. Have you ever met him?
     
    #22     May 6, 2018
  2. ktm

    ktm

    I get the same thing from IB. Send 100 and get 7 or 31 and then the market moves away and you have to chase it. This gets alleviated a little if I am less aggressive on the price, walk it down much faster and/or put it out there when the market is pretty calm. This is on ES FOP spreads.
     
    #23     May 6, 2018
  3. JSOP

    JSOP

    One thing I found is that when the market moves away from you, all you have to do is remove the rest of the order that is not filled and then you will see your unfilled order was actually at the NBBO price and your order was the ONLY one at that price. And if you remove your order, the market will actually come back to the previous price and will even price improve. That happened to me many times. I used to chase all the time until one day I got so fed up I just removed my unfilled order and I discovered this.

    I trade one of the most liquid instruments in the market with extremely high volume, there is no way that my mere 100-option order would move the market when option orders of 1K or 10K can get filled without a blip on the market. I dunno if that's IB's TWS being slow in updating the prices or if it's MM's playing games on exchanges.

    I will be interested to hear what Mr. Morse says.
     
    #24     May 6, 2018
  4. Robert Morse

    Robert Morse Sponsor

    Not sure what to respond to. If you trader QQQ or SPY front three expiration and the options is not close to 100 delta, I have seen brokers selling that the offer is 25,000+ options to get an institution to take it as they can play without moving markets. Size has more effect with liquid stocks that are hard to hedge or when there are no customer orders in other strikes of the same symbol.

    And, if you better wide markets where your bid or offer still provides an edge, you can expect an automated MM to match or better your order to play. They have no incentive to show their best without competition.
     
    #25     May 6, 2018
  5. JSOP

    JSOP

    This is my original question:

     
    #26     May 6, 2018
  6. Robert Morse

    Robert Morse Sponsor

    You can't access market makers as a customer. You can only work an order looking for liquidity electronically.
     
    #27     May 6, 2018
  7. I second or third support for Robert Morse. Very helpful, and pretty much everything he says makes sense. Plus I think he was the first person to respond to my first ET post (question). Top notch!
     
    #28     May 6, 2018
  8. Even an order of 2 contracts on high volume option contracts such as GOOGL, AMZN, TSLA at the respective bid/ask can be split into 2 and filled one contract at a time seconds apart.

    I have had that happen a few times through BMO Investorline. Perhaps by the time I hit enter the bid/ask as changed hence the splitting up the order.
     
    #29     May 6, 2018
  9. JSOP

    JSOP

    You mentioned earlier that:

    I am just curious how do I get access to those "small list of large MM or a larger list of smaller MM...that focus on providing liquidity" that you mentioned above? Looks like they are not on the exchanges if my mere 100-contract option order has to be filled in ten thousand partial fills when I sent the order to the exchanges via IB when those 1K or 10K option orders from institutions can be filled with one complete fill.

    When those institution orders get filled by those "small list of large MM or a larger list of smaller MM's", do those orders get reported to the exchanges or the regulatory bodies or do those orders just stay private completely and nobody knows about them? Another of my curiosity question.
     
    Last edited: May 7, 2018
    #30     May 7, 2018