"Missing" options prices in IB

Discussion in 'Options' started by jj_, Oct 13, 2011.

  1. jj_

    jj_

    Hello there fellow gamblers sorry traders

    In the couple of days I have encountered what I thought were "missing" prices for ES options in IB.

    The quote lines were there but for particular contracts there were no prices. The missing prices were for *some* calls for expiry tomorrow.

    E.g. I loaded up 1100 to 1200 strikes and all puts prices were shown but calls for prices from 1100 to 1180 were missing.
    You can see the screenshot attached.

    this was (is) particularly an issue for me cos I am short some 1175 call options that expire tomorrow. I had wanted to close them out but couldn't (no quotes) so I ended up hedging with long ES.

    Anyway I opened up a chat session with IB to find out how to "fix" this issue and to cut a long story short they said that nobody is obliged to make a market in those options and so nobody is obliged to provide a quote. This is the first time I have seen (or perhaps noticed) this but the guy was quite certain - he said look at NG for example there are hundreds of options without quotes.

    Is he (IB) correct on this? It has implications for risk management because only the last sold price is available in TWS and hence to the account page where it works out your balances, excess liquidity etc. Also of course it is not nice being stuck in an option position that you can't see the price of. And if nobody is obliged to make a market in these options, does that mean that whenever I buy or write an option I need to bear in mind that I might not be able to find a counterpart to close the transaction with when I want to (e.g. sell to close or buy to close)?

    This is very important to me so many thanks for any help/pointers.
     
  2. 489

    489

    The IB rep is correct. While any exchange-listed securities options are required to have a two-sided bid/ask with firm size, even if the strike is newly listed and/or has no open interest, this is not the case with futures options.
     
  3. heech

    heech

    The IB rep is completely correct. And your position is valued based on calculated value distributed by the exchange.
     
  4. jj_

    jj_

    Thanks guys.
    Regarding the last point, which seems to have huge implications for trading: if there is no market maker obliged to make a market in these options, surely what follows is that when opening a position you cannot be certain that you will be able to close it either when you want to or even at all prior to expiry. Is that correct?
     
  5. zdreg

    zdreg

    you can always close it at a price that gives u great pain.
     
  6. There are no “huge” implications for anything except the continued fact that people who know nothing about options should not trade them. If you don’t know what your option is worth at all times then you should not trade them. If you know what it is worth you can put in an order and someone will fill you, it just depends on how much over/under current fair value you will have to give them. There is no need for a posted bid or offer for you to get filled. Just wait until the pit is open and you will get filled, even if there is no posted market. The marker makers and other traders (who are only too happy to pick off ignorant children playing with derivatives they don’t understand) are watching all the strikes.
     
  7. jj_

    jj_

    Oh dear. I have long ceased being surprised that there is such a disproportionately high number of arrogant unpleasant sarcastic people in the population of traders as opposed to the general public.
    There must be something about trading that brings out the worst in people.

    Lucky for you that when you first started trading you knew everything such that you could ridicule all others so evidently beneath you who were not so blessed.

    Thank you for your kind words of advice.