I'm really ticked at Fidelity. The worst thing is they were saying this was in MY best interest!! I own 500 shares of Farmland Partners (FPI)...Option expired worthless on Friday. I wanted to option the 17 1/2 for May 23 (not all or none). So I put my sell to open (good till canceled) in at about an hour and a half before market closed. I put it in for 65 cents. The market showed the bid/ask at 50/70 cents. The routing said FDLM...Here is what it says. What is FDLM route? Fidelity Dynamic Liquidity ManagementSM (FDLM) is Fidelity Capital Markets' proprietary intelligent order router, which provides access to displayed liquidity through ECNs and exchanges, as well as non-displayed liquidity through "dark pools." It combines historical and real-time market data with market microstructure ... I called Fidelity asking why didn't my ask not show up on any markets. They said they were holding it. If someone bid 65 cents it would be executed. They mentioned twice about possible price improvement. Yeah, I get that and have gotten price improvement about 50 times from Schwab and Fidelity over the years. I asked if I put it on a market will it show up? They said yes, for that market. But, since this is a lightly traded option, other people (computers) in other markets may not see it. I am thinking that there are hundreds (thousands) of computers that would see my ask, no matter which market it was on. So, I had to cancel my ticket (it funny, I can't call it a ticket...A ticket would indicate there was an offer at the exchange), and write another option. This time I used CBOE (not knowing which exchange I would get filled with quickest). Also since I have a new order, I go to the back of the line!! One quick question...For lightly traded options, which of these markets could I best find a fill?? Thanks... AMEX BATS BOX CBOE ISE NOM PCX PHLX There was no price increase for choosing any of these exchanges I believe...
I had a similar unpleasant experience: I wanted to close some short illiquid (low volume) options by buying back, but couldn't because there was no Ask in the book, even after submitting my limit order. I was thinking this Market Maker system is there to always provide liquidity, but nada. Why then not abolish this useless MM system?
In your case, there literally may not have been a market. No one wants to buy something that is (potentially) worthless. The market said there is not value (way OTM)... With my case there is a known market...
Cabin111- it is difficult to predict in advance where customer order flow will end up. From looking at daily volumes, I would try PHLX, CBOE or ISE. I'm not sure why your order was not sent for price discovery to one of the option exchanges, but your broker might use an option dark pool to save cost. Our SMART route does not hide your order in a dark pool. On some of our software you can also choose one of the 16 option exchanges or our SMART route.
Well, option markets are more complex than equity market and both would suffer without Market Makers. Option markets would suffer without their depth and liquidity. They would not survive. What irks me about option and equity markets are the fragmentation that many exchanges cause while companies like NASDAQ, CBOE, NYSE and MIAX own many option exchanges and profit from the fragmentation. I would prefer one order booked with time/price priority. Let them each have one!
Thanks...I am not an active trader. I trade maybe 50/100 times a year. Usually it will not matter which route I choose...Example buying or optioning things like Walmart or ADM. It will be easy to find a market. It's just the idea that the order was not sent (posted) to ANY MAJOR MARKET, for at least a few minutes, is the upsetting part...
Not on a soapbox...Just thinking out loud. Was fraud involved in anyway on this trade? Was I wrong to assume that my order would not show up on any market for at least few minutes??
Don't keep us in suspense... did you get filled after specifying CBOE? Lol. Was it at a better price than 65₵?
You can talk about market structure, internalization, and payment it all becomes irrelevant if you're a nickel away. Get it all wrong, but the NBBO was a nickel away. Smart routing often won't find you a nickel. Before you bitch where does it list? A smart router becomes irrelevant if it's single list.