Substandard execution prices for option spreads

Discussion in 'Options' started by nixodian, Oct 27, 2010.

  1. nixodian


    I take screen shots of every trade I do, sometimes when I trade SPY options, IB executions are substandard. on my 2nd trade today where I sold 10 iron condors Nov 19th, 123 124 110 109.
    On the 109put leg in particular, I ended up buying it at 0.50 and 0.51 when the ask was 0.49. The iron condor sum should of credited me 0.22 an iron condor, I had my sell limit price at -0.22 yet I wouldn't get filled so adjusted the limit price to -0.21 to ensure execution. -0.21 is the price I got when the market price was -0.22, the price I should of got. Anyone know why the substandard trade prices? IB can only lose clinets if this always happens, as it don't matter how cheap the commissions are if the trades received are substandard. Also many features in IB for option traders are sadly lacking.
    Or is this the fault of IB as I was informed that prices got for spread trades, where 2 or more legs, don't always get the sum of the prices. Anyone got an idea?
    And IB has their software set up the other way, so you have to buy an iron condor to get credit, rather than sell, so hence the prices prefixed with a"-"
  2. nixodian


    if look at the option chain in attachment can see discrepancies in prices received shown in 2nd attachment , is this common for spread orders?
    btw is it not possible to have 2 or more attachments in a post??!
  3. nixodian


    attachment is the trade page, showing execution prices received
  4. Many of these types of trades are like roach motels. Easy to enter and near impossible to exit in times of duress, like a surprise event or a gunned set price the week of expiration.
  5. Remember there is no such thing as a free lunch anyhow all that work for a net 210 dollar credit??
  6. On a spread, both sides have to be at least midpoint to execute. In my experience, if you try to buy/sell a spread at some limit price, you have to wait until the underlying trades right through and beyond the theoretical point where the spread would be worth what you're saying you're willing to pay for it before you get filled.
    Which is just a long way of saying you'll get hit on the full b/a spread on both sides, usually. Just the way it is. You have to take that into account.
  7. nixodian


    I believe thats a reasonable return in terms of %. its 21% gross
    I could of just sold loads more and earn around 5x that, but increased exposure.
    21% thats a fair return no?
  8. I'm a huge fan of Iron Condors. They are all I currently trade.

    I'm comfortable with the 109/110 spread, but the 122/123 is way to scary for me.

    I trade each spread side separately and never concern myself about the leg prices, just the credit. That way I don't have to wait as long for a fill at a good price. If I don't like the credit on one of the sides given my estimate of risk, I let it go for a few days or even longer.

    I use TOS. I usually get the the limit price, sometimes better. When I trade a large number of spreads, I may get filled in 2-5 different groups with each potentially having a different price.

    Just trading through your price (Mark) does not guarantee a fill. The quantity you asked for may not be available and the buyers may not be willing to raise their bid. If the bid price goes through your limit and the quantity is small and you didn't get a fill, I would deffinitely look into it.
  9. I've not yet experienced that problem. I only trade where there is large open interest and good daily volume. I've only had to bale three or four times in 11 weeks of trading with TOS with a market order and got good prices each time. The rest of the time, I either got my limit price or passed on the trade and let the spread expire for full credit.