As I understand it, the market maker has to fill an order, for up to 10 contracts, at their stated bid or ask. However, there are up to 5 different exchanges where an option can trade, and each has its own bid/ask. So, if my broker routes orders to a market where the ask is at, say 2.8, then I may not get any with a 2.7 limit order, even if another market is quoting an ask of 2.7 or even lower.
In addition, I have noticed that frequently I will get a fill at the mid-point of the bid/ask spread (using limit orders, of course). The quoted ask may never change, staying above my limit price, but my purchase will get filled. For instance, I don't think the ask on LUEAD ever got down to 2.7 today, but I got some (only 4, though) at that price. So, if my order had been for under 51 contracts(and therefore done electronically), I probably wouldn't have gotten any.
Not sure if I have this right. I've been doing options for 3 years, and I still don't understand all the mechanics. |
