Tough to get some credit call/put spreads at the Mark (TOS ) limit price. Anybody have experience with market orders with wide bid/ask spreads. Do MM's trade at the Mark?
I would stay away from market orders when trading options. If you can't get filled at mid try to work the order somewhere between mid and the far side. Give it some time, sometimes a MM actually has to look at your order and fill it. Meaning the algo may not fill it immediately. Yes, MM will trade at the mark. It just depends on their current inventory. If the MM's inventory is heavily long and you show a bid at mid they will gladly fill you to offset their risk.
Thx kv helpful. I guess if the stock price is moving then the option prices are changing too quickly for the MM to fix a price.How do they set the algo to do the trade, i assume its below the mark at any point.On the level 2 for the option Z shows up wonder if that is the algo.
Where a option is "marked" has zero relevance to a market maker, he will trade based on his theoretical values. When you are trading spreads in markets with wide bid/ask spreads, do not use market orders. Start with a 1 lot spread, at a price you think would be a great fill for yourself and slowly move the price until you are filled. Also if your broker allows you, direct the order to the CBOE, which I have found will generally give me the best fills.
FSU that basically what I am doing I start at the mark and move down/up as far as I want to go. will try CBOE thx. I would only use a market order if the spread is narrow and volume is high.
What I have found also is that size matters in illiquid options. I might be filled on 10 separate 1 lot spreads but if I put a 10 lot spread in I wont be filled (even at a worse price).
I am finding that with low open interest it just depends on stock price movement.I have a credit put spread on BKNG where the mark is 50% more than my offer and still no trade will check back tomorrow
I'm scratching my head here. I think by ToS you are all referring to a platform think or swim, but the term 'mark' is confusing me. Is this something proprietary to that platform or are you referring to settlement price, as in, was 'marked at.' If the later. Then for even thinking in that manner.
Wheezoo 'mark' is a TOS value that is mid of the spread so it gives you some idea of current possible trade price or at least a starting point.
Thank you. I think it's a terrible term to use, and surprised they chose it, but now things makes sense.