Until another institution decides to take the offer three more levels, with the stock unchanged. Then, said mm is no longer happy.
I have been exclusively daytrading SPX options for years (quietly for the most part ). I would agree with you that its only worth paying the spread at very select times- these occasions vary depending on your time frame and motivations to enter or exit. Further I share your hope for CBOEs ongoing monopoly. Efficiency in markets is WAY WAY overrated.
I am talking about when retail traders lift offers of mm's. They have no worries, any big institutional order is going to be shopped all over they wont just lift the crowd.
It was really fun in illiquid stocks when the institutional order did pay your offer. I remember it well, the broker walks into the pit asks for a market, you yell it out, he says buy 'em the crowd says sold, then you look at the stock and miraculously it is no longer there.
Bro, I remember us being in the room with JC and you saying "I'm going to offer 1500 calls" and boom a 1500 lot would appear on my screen out of no where. You were much of the volume in those days....
lol, even better when JC would slip and mention some obscure ticker he was looking to unload. He would dare me to offer 500k at 18 and then beg me to lift the order when it hit the book. Good times...
When I was running OPM we would routinely trade over 100k contracts a month and we worked the Amex against the CBOE to get reasonable fills. When we looked into futures options we simply could not get the level of service or market we wanted so I am probably biased. But this was a few years ago, Atticus was kind enough to let me know things are much better now. How long will you be around this website Atticus before you just buy your own island and retire?
Hopefully before I blowout. So far, so good. I should have qualified my last with, "You obviously haven't trade ES options lately".
With portfolio margin, I prefer SPX & OEX over ES. The spreads are narrower and commission are indeed much lower. But ever since IB put their restrictions on PM, I've traded SPX less.