thestreet.com
check out the section on payment-for-order-flow at option exchanges.
also, for CBOE problems yesterday, funny that 2 of the series I traded were MSFT and SPX which both got caught in the draft. what are the odds to hit 2 of the 260 (out of 80000) that were affected?! :-) what a pain not to get fill reports till the following morning. <ng>
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Options Traders Comfortable in
Wake of Greenspan Testimony
By Brian Louis
Staff Reporter
7/20/00 2:02 PM ET
Despite a sizable pullback in the Nasdaq Composite Index earlier this
week and the potential of worrisome Humphrey-Hawkins testimony by
Alan Greenspan Thursday, sentiment indicators used by options market
pros were still suggesting a pretty large degree of complacency.
Now with the market
rallying after
Greenspan's remarks,
they seemed to be
right. That won't,
however, stop traders
from worrying that
others aren't worrying enough.
The Chicago Board Options Exchange Volatility Index, or VIX,
which traders use to gauge anxiety, the CBOE equity put/call ratio, and
implied volatility on the Nasdaq 100 unit trust (QQQ:AMEX - news)
continue to indicate investors may be too content with the current
market.
Jordan Kahn of Kahn
Asset Management
noted that the implied
volatility of QQQ -- the
trading symbol of the
Nasdaq 100 unit trust --
has continued to trend
lower, now in the high 30s, compared to where it was in May. "I still
don't think there's much pessimism out there," he said.
The VIX continues to hover in the low 20s, and has for a while, showing
that investors aren't particularly worried about the market, a classic
warning sign to contrarian traders.
A technical problem at the Chicago Board Options Exchange
Wednesday was still causing some headaches Thursday as some
firms worked to clear up problems.
A CBOE spokeswoman said the systems problem began at 9:30 a.m.
EDT, affecting 260 of the 80,000 series that trade on the exchange.
The problem was resolved early Wednesday afternoon, she said, but
there was a notice of a floorwide fast market all day, indicating that
posted quotes may not have been current.
A series refers to an option contract on the same underlying stock
having the same strike price and expiration month. Several series in
Microsoft (MSFT:Nasdaq - news) were affected, the spokeswoman
said. That notice is used to alert market participants.
Rod Jamieson, vice president of options at First Union Securities,
said because of problems with orders from Wednesday, his office was
still trying to straighten out problems on Thursday. He said orders that
came into his system Wednesday were routed away from the CBOE
because of the problems.
These technical problems have become a competitive issue because
the exchanges are battling each other so fiercely for order flow.
A CBOE spokeswoman said all systems were running normally
Thursday.
The Pacific Exchange announced today it will be launching a
payment-for-order-flow program and unveiled what it calls a
"quality-of-execution report."
Several other options exchanges previously announced they would
start payment-for-order-flow programs. The Pacific becomes the fourth
of the five U.S. options exchanges to offer such programs, under
which rebates are paid to brokerages that trade on the exchange.
The Securities and Exchange Commission said Wednesday it will
conduct a study on the development of payment-for-order-flow and
internalization in the options market and any changes in market quality
since the multiple listing of options. |
