Large LEAPs Orders

Discussion in 'Order Execution' started by thomas3133, Jun 3, 2011.

  1. Hello,

    I am interested mainly in long-term options investing (through LEAPs) and I am afraid that it may only be implemented with relatively small amounts of money (such as 100K) and not with respect to larger amounts (such as 1 million portfolio or even more than that).

    I suspect that when an order is submitted for a large quantity (say, 5000 contracts) if it could be filled at all (so there is enough liquidity) the market-makers will change the price substantially in the opposite direction (that is, increasing the price when I try to establish long positions and decreasing the price when I try to establish short positions). I assume they can do it and still keep the synthetic relationships since they just can increase or decrease the implied volatility that is embedded into the different strikes.

    Basically, I would like to understand if the increase of the sums involved may in itself turn the option investing through LEAPs to a strategy which cannot be implemented successfully. Also, I wonder if there may be a difference in this regard when using single orders (such as long call) versus spread orders (such as short vertical put). Thanks!
  2. rmorse

    rmorse Sponsor

    LEAPS is some options are often 5000 up or more, but not electronically. Spreads are often easier to find liquidity. You'll need to make use of a broker to "shop" the order to find liquidity without moving the markets. Give me a call Monday, I can help with that.

    Shoot me your contact information in a PM.