How to pull the rug on SPX market makers

I dont trade with the screens, every market I deal on is live quoted to me live from my floor broker and all the markets I get are tighter then any screen market.

I came here because this is funny to me. There is nothing you know. How do we all know this? because you seem to think that there are endless 50 lots and 100 lots sitting behind your 1 and 2 lot bids and offers, you seem to think that you're some how pulling the wool over the eyes of those small MM's that fill your 1, 2 and 3 lots. There is simply nothing you can do to make the pit trade any order they dont want to, and they're only going to fill those small lots when there is enough edge in the trade to satisfy them.

 

SO you post some statement, almost everyone here disagrees and now you say they are all idiots? Doesn't it strike you as a bit strange that everyone you 'meet' here is an idiot, and you are the only one right? Even statistically that is very unlikely, should start you wonder, I would.

But maybe you'r used to that situation and is that what happens to you in the real world as well, all day. In that case I wish you luck, because your attitude will guarantee a very loooong and slooooow learning curve and is about the worst you can have when you start trading.

Enjoy it while it lasts, won't take long.

Ursa..

 

If this sound weird, you ar not alone. There are many things you can learn from strangers on the Internet. There are many successful people who know a lot more than you do. Always be respectful to others when you initiate, don't come riding on a horse.

Its not a matter what I think , its a matter of what I do everyday.
Yes they fill those one and twos faster than a blink of an eye, cause you are costing them big bucks. Their greed is enormous, they are left with a smaller piece of pie since many people have abandoned them choosing to trade NDX, RUT instead of SPX.

Try it.

 

Has that ever occured to you dinkhead, that I am not required to share anything with you or anyone? Why bitch and moan when someone brings something to the plate for free? You would pay $5000 on Seminars where they will teach you this little trick.

You seem to be most upset about this. Others have picked it up and using it to their advantage. You are a sour fool, dishing nastiness toward me which doesn't even run on me cause I am so thick skinned.

Now get lost.

 

I am sure there are places all over the internet which we all can learn from. What you're preaching here is not part of that universe. But okay I'll bite for the fun of it...

How are your 1 and 2 lots costing them big bucks?

 

Read the post.

No more discussion with a certified lunatic that just tore out from a doctors office into society with his straightjacket still dangling on his hip.

 

The market does not have to fill other orders on the price of your order. If you split the bid offer spread and if that series trades on your price then you get your 1 or 2 lot.

If the market going in on a particular a call series you want to trade was 19 bid... offered at 23 and you bid 21 for a 2 lot the mm's are under NO obligation to fill any other orders at a price of 21. The beauty of that is that if another order for greater size comes in and is placed on the box, say an order to pay 20 for a 50 lot, your 21 bid for 2 actually protects that order since now no one else but the pit can see that 50 lot bid and when the futures move down to the appropriate price they will simply sell your 2 lot at 21 and then sell all 50 at 20 immediately so long as the futures fall to a price where they feel there is sufficient edge as to buy the futures and sell that 50 lot at 20. If the futures move up they won’t bother filling your 2 lot nor would they be interested in selling the 50 lot at 20 bucks. But it gets even better, if other orders in nearby strikes come in and they end up buying options from those other orders they always have both your 2 lot and the hidden 50 lot to lean on in order to sell them at a higher volatility level then they just paid in a different strike.

In essence the 1 and 2 lots are helpful in allowing the pit to lean on any other orders that might be out there. The beauty of the “out back” or the large collection of mm’s who only trade 10 up is that they keep the bigger greedy mm’s from leaning too long on those hidden gems like the rare 50 lot that might be put on the box. The 10 lot crew is more willing to trade the 1 and 2 lots for a lesser amount of edge then the big firms.

Of course almost all the of the size order flow, say 25 lots and higher don’t get put on the box and they’re held orders by floor brokers. Also, few of them are retail orders and only retail orders have standing in the pit. So all the off floor orders that come from prop houses and institutions have no standing don’t get put on the box for all to see and contracts can trade all day long on their price and they don’t have to be filled. Then again most of that order flow is shopped to other prop firms and other off floor liquidity providers before those orders ever hit the pit. Then the floor broker simply walks into the pit and since he now has both the buy and sell side of the order he crosses it at a pre agreed upon price and he may dish some off to the mm’s to keep them happy.

It all has a place in the market and unfortunately in a product like the SPX since its aimed at the institutions not the retail guy, that little 1, 2 and 3 lot retail guy gets screwed.

 

Where did you get all of this pit action stories Xflat?

What you trying to prove in theory, doesnt happen. Alls bids are required by law to be shown. If I am trying to buying back an option my Bid will be shown. There is no underhanded co-mingling of bids, if that were the case anyone can divert the market whereever they wanted. That doesnt happens. The minute I put my order in, I can see myself on that BID on my computer screen, if not I call my clearing firm and they have to show it. Always demand your BID to be shown.

 

Read it again you didn’t understand it. You’re a retail customer and yes your bids and offers must be posted. The majority of the business in that pit which are 25 lots and greater are not retail orders they’re “firm” or “bd” meaning they’re institutional order flow and therefore do get posted but only if requested by those firm or bd guys. The market can NOT trade through those orders but they can trade all day long on the prices of those orders and they don’t have to be filled. It’s the floor broker who handles those orders fiduciary responsibility to make sure his clients orders are not traded through.

When you re-read my previous post pay closer attention as to how and why when the 1, 2 and 3 lot RETAIL players help the pit get better edge on the larger lots.

Although I never traded as an MM In the SPX pit I was an MM on the CME, AMEX and PHLX for over 16 years.

 

Are you done?

Thanks.