You wouldn't see a change in the "public" market, as you suggest. However, especially with options, these spread are outrageous. As a friend of mine in the industry said: You know what they did to clean up the spreads on NAZ? Options are next.
However, I digress.
Many options are traded on different exchanges, and you can sometime get better pricing if you try to shop your purchase/sale. YOu may be seing a "composite" of all three exchanges if you look at the prices through the web, or brokerage tools. I know how some places do this, but not all.
The bid ask you see is set by MM, however there is an inside to these market bid/offers. You don't see this, as you suggest. I've been executed many times in the middle of the bid/ask. Maybe someone is being generous (I doubt it...), but this is the way I do options, and recommend other do as well. If you place a bid or offer in the middle and there is no taker, the public bid/offer must change. You are now either the best bidder, or best offered and you're theoretically in front.........but wait.
There is a big fly in the ointment here, though. As was explained to me, Hitting the bid or ask is easy: all electronic. Once you attempt to change it with an "in the middle bid", it back to the manual way with someone hawking your trading position. In the meantime, the electronic board changes to the position you're attempting to have a floor clerk fill, and someone hits the bid/offer at your price!! Guess what? It may or may not be your, as your guy maybe still on the floor shopping your specific trade!!
Hope this helps. |
