How do you find out the max number of contracts available at a strike price ?

Discussion in 'Options' started by Aston01, Oct 4, 2011.

  1. Aston01

    Aston01

    In theory lets say someone wanted to buy $5k worth of contracts at a given strike price in Microsoft, they probably wouldn't be too hard to come by, but what if a hedge fund wanted to buy $500k worth of contracts at that given strike price with 1 week left before expiration.

    How would they know if that quantity was available to them?

    How would they go about buying them at the best price as to not spike the price?

    How would they go about unloading that kind of size with such a short window? (Is it even possible ...assuming they didn't want to exercise them)
     
  2. I believe that the market makers have to guarantee the bid/ask on about 10 contracts, so I assume an order of $500,000 might require a quote first.



    ----------------------------------
    The market gives us Lemons, I make Lemonade :)
     
  3. I don't know if it's industry wide or broker specific but there are various algorithms for disguising order size:

    Hidden Order - not displayed to the market

    Iceberg Order - only a portion of order displayed

    Scale Orders

    etc
     
  4. There used to be a minimum size on the ise, but I don't know if they still have it.

    Generally the market is deeper than the screens suggest, but if you want to trade say 10000 contracts (1mm shares) at a clip you should shop the order or call a bank and ask them to commit to you. For this you need to have a relationship with them and a prime broker relationship.