How does ISE function ?

Discussion in 'Options' started by omcate, Feb 13, 2003.

  1. omcate



    I submitted an option limit order with a price within the bid-ask spread. My trade was posted at CBOE. ISE immediately posted a quote with the same price but different size. I canceled my order. The corresponding quote from ISE disappeared. I tried another option. Similar experience.

    Does anyone know how ISE determine its bid and ask prices ?
    Does any honorable ET member have a handy computer virus that I can send to ISE so that they won't interfere with my trading in the future ?


    :p :p :p
    :D :D :D
  2. If the market maker at the ISE is leaning on your orders posted at the CBOE. There's not much you can do. I would keep my bids as low as possible the "Lean: is less attractive. Maybe even tempt him him to match your bids then cancel. At least you've noticed a behavior you can use to your advantage. - Perhaps put up a bid when you want to sell, then hit the ISE when they match.
  3. white17


    This is just a guess. Was the size that ISE posted LARGER than the size on your order? Was this on one of the few stocks that are now supposedly "linked" electronically to other exchanges? I have no complaints about ISE compared to all the others.
  4. omcate


    The size is usually larger than, but occasionally the same as my trade. I performed two tests today. One of the underlying stocks is affected by the Options Intermarket Linkage. The other is not.

    :eek: :eek: :eek:
  5. white17


    I don't know but I think I would have left it long enough to determine that you weren't going to be filled. Maybe you did. If you get filled at your price, that would be all that matters to me. I wouldn't care where it happened. Oh that's not true. I don't want to give any business to AMEX or PHLX. I doubt there is anything shady about it.

    As far as size is concerned if you're trying to buy or sell at less than a 10 lot, the size will oftentimes display as 10. I guess that's because the auto-ex was set up for that number previously and may still be in some exchanges. Just guesses.
  6. I know that some cboe mm's have auto quote programs to match the nbbo automatically. Maybe ISE has started it also.
  7. not legal.......manipulative practice

  8. Not positive about this, but I think there were some traders that did this awhile back and got in a lot of trouble. May want to approach this one with some caution.
  9. omcate


    That is a likely explanation. I noticed that happened a few times in the last two weeks. I just did some tests to confirm today.

    Thanks for all the replies.

    Happy Trading.

    :p :p :p
  10. Why not just post your bid on ISE? Before ISE you could NEVER buy at bid/sell at offer. So you have some competition but at least you have a shot at beating the spread now.
    #10     Feb 13, 2003