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Strategies & Market Trends : Canadian Options
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To: Porter Davis who wrote (1508)4/12/2000 5:18:00 PM
From: Robespierre  Read Replies (1) of 1599
 
Porter, you had some funny quotes on BCE options today (Wed). Was there a delay in the real-time quotes? Actually my quotes are still updating at 4:25pm. Also, how do you adjust your quotes when the futures close rich (i.e. on Friday after the program trades). Today they were a few points rich. I'm asking because I bought the APR150Calls today because the futures were rich but it looks like I did my calculations (for the BCE options part) on STALE DATA so there's another lesson learned. Basically I was looking at what stock price your APR 150 Calls and Puts were implying vs what stock price the futures were implying. A tiny trade anyway.

I'm not a regular customer anyway since I have a US broker that gives me best execution on US exchanges. On BCE I get better bid-ask spreads than Montreal. No one exchange has a better spread but combine them and you can't compete. On Nortel I get way better bid-ask spreads. Sometimes I pay zero for a Nortel spread and I have seen arbitrage opportunities with spreads of -1/16. I also get fast fills with no KYC rule and less commission. More than makes up for higher IV (since when I sell the options I sell a higher IV) No ITM APR options in the US so I traded the options in Montreal (probably for the last time ever.) With the ISE coming on I don't see why anyone would trade Canadian options with multiple US listings in Montreal unless you really, really, really don't want the currency exposure. ISE is going to make a huge impact and is probably the #1 threat to your business. CBOE is worried sick so much that they are proposing a payment for order flow scheme. You're going to have to automate quick and reduce marginal cost of an options transaction to basically zero. I pay $1.95 a contract to trade a US option (min. commission $1.95.) I pay $35+ $1-3.5/contract to trade a Canadian Option. In the end my transaction cost for a multiple listed US option is about 1/8th the Canadian cost.

PS I also like the extra 120 seconds and give the SXO market makers my regards for keeping their spreads much tighter than comparable US indices even though no one ever trades them except me and about 2 guys a day at Greenline.
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