Why limit traders to 4 legs on complex options?

Discussion in 'Options' started by darkshogun, Jul 2, 2013.

  1. There are quite a few fantastic complex options strategies that could be used if brokers would allow traders to submit orders of greater than 4 legs at once. Unfortunately at this stage it seems to be impossible to capitalize on these opportunities because of this limit on trading opportunities. Allowing traders to execute, for example, 2 butterflies simultaneously on one order, to be filled AON, opens up new possibilities and variants on strategies that cannot currently, realistically achieve success because the necessity of legging in (and the risk it presents) destroys the strategy before it begins. Anyone else agree?
     
  2. stoic

    stoic

    no
     
  3. No, it's stupid.
     
  4. There is nothing fantastic about any of it. Lots of problems here. For one thing, even an ATM fly (100; 100/110/120) has a small gamma exposure. Coupling (combo-ing) two ATM flies is not difficult to fill w/o taking much risk.

    AON? No problem if you're marketable. You lose edge as you add complexity, but feel free to PM me if you'd like to arrange a complex fill on an order of your choice. As complex as you'd like it.
     
  5. It all depends where you are trading. At IB you can put in endless legs in a trade. The problem with this is in the end you have an incredibly wide bid/ask spread on the position and is unlikely to get filled. Exiting the positions in a hurry would be a nightmare and cause extreme slippage. I would only do with a strategy you intend to hold to expiration
     

  6. "What he said."