Damn, life got interrupted so I'm only now getting back to my thread to post replies. Hopefully there are still interested responders. There seem to be 3 categories of US options: Ones that ONLY trade in increments of $0.05, and you're not even able to enter a non-nickel price (in IB at least); Ones that are part of the Penny Pilot Program (PPP), which if I'm understanding correctly display and trade in $0.01 increments; Thirdly, ones that only DISPLAY in $0.05 increments, but for which you are actually able to input penny-increment orders (that don't get rejected, but I think only post to certain exchanges). The example I gave in my OP was for this third type: I could input a Sell price of $0.24, but it only shows up in the quote window as $0.25...though if it gets hit, it'll be at the $0.24 price I input. IOW, no "special treatment"...in my OP I was just giving the example of one of these 3rd types that laid bare how broken it all is...when I'm offering the best price, but the option still trades through to others at $0.25. But I don't think this 1 vs 5-cent increment is all that important a piece of the puzzle. I haven't configured my IB SMART router at all, and yes: I suspect I'm paying waaaay higher fees than I need to by virtue of just accepting IB's default SMART settings. (That being said, the parent issue is that I just want as much $ in my pocket as possible after all is said and done, and both rebates and fills are indeed part of that picture.) See above for what I think are the 3 types of option increments that I see on equity options... Yes, as above: I think I'm probably a sucker in not having learned how to optimize the IB SMART router settings...hoping this thread will help in that regard. This actually sounds like a plausible explanation. Is queue priority strictly respected/regulated at every exchange? I saw a few replies ITT that hinted at the ability for some HFT's to somehow preferentially jump the queue at a given price point... I'm getting a better understanding thanks to the replies ITT...though I think I'm still in the dark as to how to avoid this. But even just optimizing what I'm able to would be a step in the right direction. Are the statements below (reflecting my understanding) correct? I can submit to a specific exchange (rather than using IB SMART), and I'll be first in the queue at a given price level, and will 100% be the first one filled at that price on that exchange? (Or can I somehow still be jumped in queue priority?) Both execution price and rebate (or fee) are variables in how much money will end up in my pocket at the end of the day, and there isn't a cut and dried "optimal" way to route orders to maximize that dollar figure because much of it depends on how the buyers are choosing to route their orders?
Thanks for the explanation. I never knew that. Do you know which exchanges accept penny increments? It makes a lot of difference if you trade large enough quantities. If you know it great, if not, it's ok. I will find out myself. As far as I know, those 3 routing options are pretty much the only ones you can configure in IB's SMART settings. The only other option is to direct route them to specific exchanges.