Spitting into the soup of the MM :-)

Can I get any problems if I as a non-pro active retail spit into the soup of the MM by putting slightly better prices into the orderbook?

 

Large market makers have former special forces soldiers on retainer especially for the cases like this one.

 

With equity options, you can bid or offer where ever you want, you just can't bid andoffer in the same options. They don't allow two sided markets to open.

 

do it in futures options. pm before you do

 

I once was trading a stock that had a bid offer $40.15/$40.19. I put in an order to buy at $40.17 and when the limit order posted my cat suddenly died and my left testicle drooped. last time I ever tried to mess with the MM.

 

They'd probably thank you to for being there. HFT and the groups paying for order flow will use your quotes to lean on. You'll be a sitting duck competing in the area.

 

Thank you for not posting pictures.

 

Would it be allowed if on different exchanges? Bid on CBOE and offered on BATS for example?

 

Good question. I never had to ask that one.

Even if you were allowed, your broker will block you. They have a regulatory requirement and it is easier to build into their OMS one set of rules than many. The fact is that all option exchanges don't restrict this. I believe only the ones with market makers that they don't want to give up priority to you and not be regulated and pay exchange dues.

If you claim pro-customer, you can make two sides markets but many brokers including IB still block two sided markets because it's to hard to code two sets of rules.

 

As usual, 1245 giving lots of useful information for retail traders due to his inherently helpful nature. I hope it is appreciated by all.