I disagree. I find it hard to imagine a BD taking an order that was entered as a spread with a limit and routing one leg to one exchange and the other leg to another exchange. If that's what your saying. I agree that there's no way the broker is going to leg in.
The complex order book (COB) on the exchanges is monitored by a small number of large market makers. They don't do trades to match the NBBO. They will only trade with the spread if their system sees "value". Very few traders can "see" the order book and enter trades. Even if they could, they could not get to "good" orders faster than GS, Barclays, Timberhill etc., which are automated. So, it's possible to have a spread order in the COB, be bid to offer and not get an execution. It's not typical, but can happen especially with options with natural wide spreads, and on one leg, a small order comes in to change the NBBO on the spread, but not the values by the market maker. Bob
in my whole option trading life I have never seen legs of a spread get executed on different exchanges. find an example and prove me wrong.
Not sure if this was directed toward me but i never said you would get executed on different exchanges I am just saying you would see the best quote on each leg which might be on difference exchanges and hence why you would not get filled. Only explaining why someone might see a better quote and not get filled. I agree with you that you wouldn't get filled on a spread from two different exchanges.
Hey guys .... when I unloaded the spread today at break even, I did the legs separately and it executed much more quickly.... agree spreads are handled as a separate thing than regular buy/sells, it was 100 puts bought and 100 puts sold.
Now you guys have piqued my interest once again. We see all the options exchanges, and only trade on the ones that pay us for liquidity, or are the cheapest to take liquidity of course. Do you not see each exchange and enter your own trades? If you want to sell a strangle, just look at the consolidated quotes and pick the best prices, right? I understand the COB and, for the obvious reasons already noted, no one should use that since the MM's just "lean on" those orders, just like the good old days. Robert or anyone, am I missing something here (I know I don't trade retail, but even so..) Don edit: You're not just giving your brokerage firm a limit spread order are you? I can't imagine doing that in this day and age of electronic trading. Just curious on this as well.
Don, what is the problem with putting in a limit spread order ? Newbie as far as stock and options execution is concerned. Trying to learn. Thanks
Don, I did not get your question. Also, MM don't lean on orders in the COB. For the most part, very few have the facility to view it, it's automated to those that have their systems monitor it, looking for edge. Those that can see it like Susquhanna and Wex, know they can't lean on orders, they disappears to fast. Not like the old days when spread brokers held the orders in their hand. Bob