Discussion in 'Financial Futures' started by Sarasota, Jul 5, 2003.
How is the volume of SSFs? Is it picking up at all?
Market Makers post bids and asks and fill you at the quoted prices. If you buy at the ask and sell at the bid you'll always get filled by the market makers, and the total volume is not important to you.
If you want to "sell into the buyers" and such, then forget it.... since there's no buyers to sell into. The volume is nonexistent.
Will absolutely not fill you if you try and bid rather than just hit the ask when trying to buy/cover. Basically had to wait until the ask came down to my bid, nice to see the spread diminish from 6c to 0c though . I guess there really is no one else out there trading these things (I was trading amzn SSF today).
As someone making markets in SSF's overseas for TImber Hill (we also make them on the US side ) how would you call that stubborn. Here's the picture. We try to make as a tight spread with some size as possible - naturally we have a profit factor and costs build into the spread. So we place the markets on the screen. Here is our bid and there is our offer. You join our bid and call us stubborn because we don't hit it? Hmmm..... are we supposed to take all the risk, and then give them away for free?
My advice, instead of joining the bid, either lift an offer or enter something midway. In the second event you are actually adding liquidity to the SSF's. If other retail or non-market makers do the same, liquidity grows, volume increases and every one is happy.
Your comment reminds me of a typical broker comment we get all the time. Say we're quoting a market 110 at 120 for a given option. A broker calls us and says he has client that wants to sell but doesn't want to hit the bid on the screen. As we already are showing our best price, we have no room for improvement. However, if we change our market to 105 at 115. The client then shows the 110 offer and it trades. Kind of silly isn't it.
In a thin market like the US SSF's. Don't expect much price improvement. If you just join bids and offers, don't expect quick fills.
Thanks for the condescending BS. I won't hold my breath that things will change in the Wall Street game with your statements and mentality like "Here is our bid and there is our offer."
Thank God the only light for this market is that there are multiple market makers and not just Timber Hill on an electronic platform - contrary to youir above statements. I know they are doing the same exact thing with the exact same mentality - I just don't see them coming on a bulletin board explaining ther glorious virtues for risk and profit.
The point I was trying to make is simple... MM's get a bad rap for games played in the pits. However, making electronic 6 cent spreads in SSF's and expecting them to hit a bit is a bit too much. With SSF if you lift an offer you get an instant fill at a price that will be honored. Is TMBR the only MM - obviously not. I haven't seen how many firms are actively making markets but I suspect there aren't too many. I do know TMBR is doing their best to promote the product and supply liquidity. I'm not here to defend market making, but unrealistic expectations are being made.
Although it was probably not what you wanted to hear--what Def said is the reality of the situation. Do you expect the MM to give you money while they take all the risk?? I agree the spreads on SSFs are wider than the underlying, and I've heard that the quotes for the SSFs don't always move tick for tick with the underlying--which I have to say is crap--but the reality is that you are not going to be able to "pick off" the MM when trying to trade these things. The fact that with SSF you have the ability to go short without an uptick should allow you to enter short positions with greater ease, and due to the margin it allows you to trade larger size so you don't have to hit a home run to make some cash. As far as hitting the bid or lifting the offer, I can tell you that if the market is 25-25.08, and you go in at 25.04--the only thing I can guarantee is that the MMs will get a nice laugh as that price is their theoretical value, instead I would say try and trade at the midpoint of fair value and the bid/ask, at least that way the MM may consider filling as they should be able to generate a small edge, post some actual trading volume, and perhaps even encourage more people to trade these things. Not trying to give you a hard time Bruto, just thought this may help you out a bit. Good luck with the SSFs, hope it works out for you.
vega well said. (other than the laugh, in our case is that we probably won't even notice an offer placed at the midpoint as the MM'ing process for those products is automated).
I just found it humourous that not only did I raise the bid 3c and kept it there until the offer was 1 cent above and still no takers. I guess the only other person trading was the MM and if it is automated like you say then it is no surprise that the bid was ignored. It was my first time using SSF and was just testing the waters. I too hope they attract more volume and liquidity.
another thing to try is to take a look at the market depth. if only one market maker then try issuing a quote request. that may help tighten the market if others respond to their obligations.
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