I am trading with Interactivebrokers and find their stock executions rapid, but when I place call options in the middle of the Bid/Ask, for example, Bid 1.40 Ask 1.50, the Bid goes to 1.45 and Ask to 1.55 leaving my buy or sell offer on the short end and I get no execution. This is happening regularly but it did not happen with the previous on-line broker I was using. I can understand this if there is very light volume, but when there seems to be active trading, I don't understand why this happens. . Can anyone enlighten me?
Is it a Buy or Sell order at $1.45. If it's a Sell; it should get hit by the $1.40 crowd. On the other hand, if it's a Buy, it doesn't have to get hit since the Ask is at $1.50 moving to $1.55. -FastTrader
You probably became the high bid at 1.45. The MM hate to give up the edge so they just moved the offer away from you. Probably IB routed your order to ISE so it was displayed immediately. I'm guessing your old broker did not immediately display it. IB is not doing anything to hurt you, in fact you're probably getting better service. Why didn't your old broker do that? Most likely they were getting paid to direct their order flow to a particular exchange and MM. If you have a quote vendor like RT you can see exactly what is happening on all exchanges and watch your order get posted.
Thank you for your reply. It is happening both ways. It happened on three trades today and also on Friday on different underlying stocks. The Ask/Bid prices change immediately upon my entry of my order, as if someone knew what I was going to enter. In two cases when I cancelled my order the Ask/Bid went back to the price before I entered my order. I was under the impression that the Ask/Bid prices are live on my TWS. Perhaps they are not. Thanks again for you help.
You're being displayed in the market in real time. The guy making the market doesn't want to give up the spread, that's his game. Be thankful, you're a player because IB and the new exchanges allow you to be. At least you aren't being displayed like this after trying to hit active bids/offers. That was the game before.
When BOX open you will be able to join the bid/ask, instead of splitting it, and specify up to 5 cents price improvement. You should get better fills then.
Like the others have said, you became the best bid. Options are tricky and I have not gathered the full knowledge of them yet, but for the most part they have a pretty wide spread. They make the money on the spread, that is the customer (you) usually have to buy on the ask and sell on the bid. Kind of sucks, but in the long run it doesn't hurt me since I dont' daytrade options. The only way to get hit while you are on the bid or ask is if the market moves against you, however, of course it is possible that you could be taken.