Tuesday, March 30, 2010

Re: [TheOptionClub.com] What's the Story on Multileg Spreads?

 

I went to CBOE website and looks like they changed things around recently.
I could not find any archived webinars, but if you see the section, I will look at them.

In general tho, while it is always better to have more knowledge about how something works, I try to trade the highest volume stocks like AAPL, GOOG, etc because I would rather get a good fill fast on a complex order, then try to trade the RUT or something traded by MM's. I know ahead of time that I will be hurt trading the RUT some day when I have to get out quick and they know it- it is probably cheaper in the long run to trade
10 IWM's then 1 RUT.

As far as what limit price to put in?
Maybe its just my imagination, but it sure seems like the trades that filed right away were mostly soon loosers, while the opposite was true of orders that took hours or even days to fill.
What would be the reason for that?

Just my $.002

--- On Tue, 3/30/10, Lawson Bartell <lawsonbartell@yahoo.com> wrote:

From: Lawson Bartell <lawsonbartell@yahoo.com>
Subject: Re: [TheOptionClub.com] What's the Story on Multileg Spreads?
To: OptionClub@yahoogroups.com
Date: Tuesday, March 30, 2010, 12:24 PM





From: Ricky Jimenez <rickyjim@bestweb.net>
To: OptionClub@yahoogroups.com
Sent: Tue, March 30, 2010 7:47:55 AM
Subject: Re: [TheOptionClub.com] What's the Story on Multileg Spreads?

 

If you could supply the link, I would like to hear exactly what the
instructor said. Was he a market maker? I haven't been able to speak
to a market maker but by a 2 to 1 ratio, brokers say that the entire
spread order reaches a single market maker at one of the exchanges.
When it comes to buy-write orders, by a 2 to 1 ratio, brokers tell me
that they are broken up and one side is sent to a stock market maker
and the other is sent to a options MM. I never got a definitive
answer as to whether they communicate with each other or a computer
puts the two legs together.

Obviously, knowing the real answer to this question would help in
making the decision whether to leg into a spread which you are having
trouble filling. Also, most brokerages, not just IB, wave the base
fee and just charge by the contract, for qualified customers. So at
least from that point of view, those customers could leg in for the
same price.

On Mon, 29 Mar 2010 20:53:15 -0700 (PDT), rvd <rvdidit@yahoo. com>
wrote:

>All I can say is I listened to one of the CBOE webinars on Calendar trades last year, and
>at the end we had a question and answer session where the instructor asked us to please not send the whole complex order to him all at once, its too much to deal with so fast - and one leg at a time is better.
>
>Not sure if that helps answer the question, but it may depend on how computerized the exchange is...
>
>--- On Mon, 3/29/10, Ricky Jimenez <rickyjim@bestweb. net> wrote:
>
>From: Ricky Jimenez <rickyjim@bestweb. net>
>Subject: [TheOptionClub. com] What's the Story on Multileg Spreads?
>To: "OptionClub" <OptionClub@yahoogro ups.com>
>Date: Monday, March 29, 2010, 7:09 PM
>
>A number of brokers allow you to specify a limit buy or sell order on
>a 2-4  legged spread on the same underlying.  I have heard some
>conflicting stories about what happens next.  One version says that
>the entire spread order is sent to a single MM.  Another story is that
>a computer figures out the limit buy or sell for each leg and the up
>to 4 orders go to up to 4 MMs who don't know that they originated from
>a single order.  Anybody know what really happens?
>
>




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