When is options scalping manipulative trading?

Good Afternoon ET -

I have come to realize that with the appearance of "manipulative trading," we are not innocent until proven guilty. In fact, we are not even guilty until proven innocent. We are guilty if we "seem to be guilty" and could get our accounts restricted and ultimately zapped!

I wish I could say I am asking for a "friend" but it is for me. My broker (to remain unnamed) is not answering my specific questions, so here I am. Simply put, after decades of options trading, my faux pas for this strike is trading thinly traded options in a manner that appears to be taking advantage of liquidity and price improvements.

The underlying (to remain unnamed) in question trades in the millions and the at the money options usually have volume in the hundreds. The out of the money options have less volume and usually have a 5 or 6 cent spread such as .06 x .11 or so. You get the idea - buy at .07 and sell at .08, .09, or even .10. Or sell at .10 and buy back at .09, .08, or even .07. It didn't always work but it often did. Timeframe for entering and exiting was often under a minute (as was for other underlyings that were never an issue.)

I am at a loss (no pun intended trying to figure this out on my own. This happened a few months ago and I haven't really scalped anything since because I just don't know what will trigger the next fateful strike. For all I know, I could see an SPX option quoted at .70 x .95, buy a couple of contracts at .80 at put in a sell order at .90 and have it fill seconds later and get my account terminated for taking advantage of liquidity. (unlikely to get good fills on SPX these days though.) Remember, we don't even have to be guilty; we just have to appear guilty.

Are there any options scalpers out there who have experienced this? Maybe there is a link to this rule (with details) somewhere? How can I get back into options scalping without wondering and worrying when the next fatal flag will be coming my way? I will never scalp that particular underlying's options again, but it seems like at any given time, any one of my 1000s of monthly trades will be the fatal one. Looking into eggshell futures.

Thanks!

AZD

 

when the volume is two and half times the twenty one day average volume. maybe

 

change brokers. This is not normal.

 

Thanks, Mark. Gambit, I may have to do just that, one way or another. I never had a problem with this before and I've been with this broker forever. I never knew we could get into trouble for buying and selling within a 6 cent spread.

 

What the fuck.. tell them to identify precisely what FINRA rule you supposedly violated

 

Not really enough info, but it sounds like a derived order rule. How many venues does the option list?

 

In your example you did not take liquidity, you provided liquidity. No broker should boot you for providing liquidity inside best bid/offer. Change brokers asap.

 

You sound like you think your broker is doing YOU a favor by letting you trade.
>>>Wrong.
Fund an account at another broker (or several), don't break any SEC rules..... and then piss on those eggshells (that I suspect) are a product of your own imagination. You're doing them a favor by being a customer. If they can't appreciate that, f em, there's a half dozen others that will gladly sign you up.

Don't close that account however.... leave a penny in it so you can still use what you're accustomed to for charts, watchlists, alerts, etc. But use the new broker for the orders.

 

sounds like they're on the opposite side of your trades.

 

Why are you so afraid of naming everything in your post? Please name the broker in question so we can be aware to stay away.