IB "Pegged to Stock" + "Volatility" Option Orders

Discussion in 'Retail Brokers' started by heech, Apr 22, 2009.

  1. heech



    I'm hoping for some advice from those in the know about IB's "pegged to stock" order type.


    1) Are *all* "pegged to stock" option orders routed to BOX's price improvement auction? Or can they end up on other exchanges?

    2) And am I subject to cancellation fees if my order is not routed to BOX, and as the price adjusts itself?

    My goal isn't necessarily to get the penny or two of improvement from BOX's auction. But I'd like to be a mini market maker and sit just inside on the bid/offer, and pick up orders. I *don't* want to pay for cancellation fees.

    IB has volatility-based orders, but the manual says I am liable for cancellation fees as the option price adjusts.

    At the end of the day... am I being silly in worrying about cancellation fees...? Where might the numbers come out, if I go with a volatility-based order? I'm actually just trying to pick up under-priced/over-priced options... say, 50 contracts a day (typically ranging $1-$2)... on symbols that have an ask/bid spread of 10-20 cents.

    So, if I just sit on a volatility-based order and wait to get filled on $50k of trades a day... how much in cancellation fees am I likely to get nailed with...? $50? $100?