New Theory About Options Cancel Fees

Discussion in 'Options' started by bungrider, Dec 11, 2003.

  1. (I apologize if anyone else has already mentioned this).

    Maybe part of the reason the fees were implemented was for margin calculations. If I have a position in an illiquid contract, placing a bid or offer (to narrow the spread, with a low risk of getting hit, since these options wouldn't trade much anyway) could drastically alter the market equity value.

    Implementing a cancel fee would help remedy this by discouraging baiting.
  2. I do not think so. They were implemented
    for one & only purpose: to suck off more money from investors wallets and prevent end users from narrowing down spreads by "retail market making"

    Far most of the quotes, also in illiquid / back month / away contracts are entered by members, who are not charged in any way.
  3. range


    do the exchanges keep the cancel fees?
  4. Yes, and thus their members would participate indirectly
  5. range


    i guess the members doubly benefit: 1) they can make more money because electronic traders cannot compete as effectively, and 2) the prices of the seats should be higher since the members have an exclusive right to cancel their bids/ofers without charge.

    it is unbelieveable that the sec allows this. next, the nyse, the amex, the nasdaq, and the ecns will want to institute their own cancel fees.....
  6. No ...