That is not the article, trading inverted markets is legal, making money @ it is the hard part; almost a 3 year old game. The suit your referreing to was by a MM concerning spoofing.
Actually, the post where Shortee references Barrons seems closer to what I remember than the Spoofing piece. It seems they were using a computer to identify opportunities. And I am not sure if it was a question of legality as much as it was the option market makers wanting the practice banned. Again it does seem to me that the CBOE ruled in favor of the market makers. But I read so many different publications that it is hard to remember what I read where, and the time I spent with the airplane glue instead of the models hasn't helped either.
A couple of years ago after I opened my account at IB I was trading GE options against my stock position. One day the 55calls on "best execution" were offered a quarter under the bid. I promptly lifted the offer for 20 lots, got em, and then hit the higher bid, locking in $500 before commish. I thought I was in electronic daytrading nirvana. Hence that trick has NEVER worked again.
It is not a game of putting a bunch of symbols on a page and waiting for them to invert; watching paint dry would be more interesting.
Scalping a crossed market will not work any more. If you guys check the new rules of the exchanges at: www.amex.com (close to bottom of the page. The "institutions and rules" link) For example, exchange A's bid is at 4.0 and exchange B's ask is at 3.8, if you entered an order to buy at 3.8-4 at exchange B, your order will not be executed. At least not through the auto-ex. system. Your order will be directed to a specialist, and he/she will not be dumb enough to execute your order. As for the example in the article I posted, the .19 is a hyperthetical example. Because for options below $3, the bid/ask increment or decrement is $.05 minimum. For options above $3, the increment/decrement is $.10 minimum.
I will let all the traders I know that trade inversions not to try on Monday; don't believe everything you read.