When I buy or sell an option I start from the mid price and incrementally adjust my order towards the gain of the market maker side till it gets filled. The problem is that the mid price is not always the average of bid and ask, especially if there is another order in play.
Is there a way to automatize this process or see at least at which price I can convince the MM to make my order filled? I use ibkr mobile.
Options transaction acceptable mid price
byu/Opening_Cow_2470 inoptions
Posted by Opening_Cow_2470
6 Comments
All you can do is set a limit and wait.
Or take whatever price gets filled. Lol
When I want to trade, I place my order 3 minutes before. That gives me time to get the order filled.
I’ll start on the lowest price and inch my way to mid or slightly above.
The automated method is just to employ limit orders. Pick a price within the spread that satisfies you and then wait for your deal, the latter being a very important point of trading. Essentially, the spread moves and your offer lands on the bid or ask, or some other criteria emerges where you’re next in the book and a Post or Fill situation gets you filled. Either way, extrinsic value (or intrinsic) shifts a little with the underlying price movement, or you gain a little in the fill or brokerage price improvement, it all comes out about the same with mild to good liquidity.
I often place limits outside the spread waiting for the trend to catch up, and then actively adjust orders throughout the day as desired from the order list that is always open. It’s not fancy automation, but it lets the market to the work.
There’s no way to know for certain what price a MM is willing to execute at until an execution happens.
If you are trading multiple lots, then you can do price discovery on a single contract, then work the rest of them at or around your 1-lot fill
Edit: you can be certain of execution at nbbo, but obviously you’re talking about trying to fill inside the spread.
The more I traded options the more I felt like I was getting screwed…..
By the market maker & commissions and federal fees
I know you don’t want to hear this. I know you cannot trade successfully from your cell phone.