I was told that even if a market does not support penny pricing for individual options, speads may be filled in pennies.
Whole Foods - Jan 26 MSFT & GE - Last Friday The rest on the 9th. I found the whole schedule here: http://www.theoptionsinsider.com/industry/?id=118 They also mention how the pilot is working out so far in WFMI, GE & MSFT http://www.theoptionsinsider.com/comment/?id=15
I've been watching MSFT Feb 27.5 calls today. Interesting that the spread remains .05 even though the tick size is now .01. Sometimes the spread is .06. All 6 exchanges are keeping their prices in lock step with each other (how many different specialists are there?). I haven't tried placing an order inside the spread yet.
Loufah, the Feb 27.50 calls have been open for trading for over an hour and fifteen minutes. 63 have traded. The Feb 25 calls were just 4.95 bid, offered at 5.00 (now just went offered at 5.05). Before .05 increments above 3.00, these might have been 4.90 offered at 5.10. The Feb 30's were just .35 - .36 (now .37) with over 4,900 traded this morning, and the Feb 32's are .02 at .03. If you look hard enough, you'll find a market you don't like. I think we need to give this new program more than a week before we start complaining about it. If a market is .05 wide there's a reason for it - hard to hedge with stock, illiquid (today that's true) - open interest OK but OI can be misleading. Jump in the middle with an order, maybe you can scalp a penny or 2. kny 3
Hey W meant to be facetious, obviously didn't work. Point was if OP thought market too wide and he thought bid too low or offer too high, send in a limit order. .02 wide market in strike as of now, didn't think nit-picking 1 strike fair. Penny pilot in mho working, but big names like Q's should be fun to watch as they're added. kny 3
=============== They [qqqq] are liquid fun,penny pricing as IB says mabe be slower , but better fills. The fills may be smaller[partial] and have been; but glad they do it.
MSFT still seems to be relatively narrow. The 30 calls were still trading a penny wide this morning and the puts were three cents wide. The other stocks tightened in the beginning of the pilot then eventually widened back out. This doesn't appear to be happening to MSFT. Apparently it actually has the liquidity to support penny price increments. I'm dying to see what happens with the QQQQs.
Everyone knew that the QQQs were the product that was best suited to the penny pilot. They have the most liquidity and seem to be able to support penny increments better than less-liquid products. I've been trolling the web looking for feedback on the penny pilot and there doesn't seem to be much. This is all that I've found so far: http://www.theoptionsinsider.com/comment/?id=16 This site seems to have fairly decent coverage of the penny experiment, although I'm surprised that pennies aren't a bigger story on the options blogs and in the financial media. After all, this is probably the biggest thing to hit the options world since they went to nickels five or six years ago. You'd think it would merit a headline or two?