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

 

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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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