Geoff -- thanks for the correction
You are right, of course, about volume, my eye slid unaccountably to the closing ask (I have very slippery eyes). 108 is a lot more than 12, but the principle is the same, although much, much weaker. The chart is at daytrades.com -- just scroll down from the opening page until you hit a quotes.com window, type the option symbol in the search window and set the time for 10 minutes. You will get a display of the after hours bids and asks and sales (20 minute delay scrolling during the trading day) in the small window on the right and an updating chart 1/6 hr by 1/6 hr. I am trying to gain free access to streaming real-time option quotes from one of my brokers, and it should be possible shortly.
As to open outcry, Dell options are listed on the American Exchange and I have never seen an option listed as sold on any other (its that stream of little "a" in the quotation window. I have mined the Amex site I think completely, but it is not helpful about the way they do things. Najarian writes about the principal market maker system I suppose on IBM options at CBOE, which permits the designated main MM to participate up to half on each of the trades but requires him or her to be always on station. This is an approach to a specialist system, but I have no idea of the structure of the Dell options pit at Amex. A few ex-linebackers like Najarian can really mess up a pit, and force little squirts to form submarkets, no two of which may communicate. When the public trader brings in an order, his success may well depend on which group he happens to join. If your limit order happens to be buried deep in his deck, he may never have time to execute it because of the ex-ante predicted low probability of success.
Remember that I have never been an options floor trader and have no first-hand experience trading on the floor. I have paid my dues, however, in excessive commissions and spreads. As a futures trader there were many years in which absurd commissions made the difference between profit and loss, but, at the time, it was the only game in town. Most of what I have studied deals with stock markets, computer-assisted markets, and futures markets. Human, open-outcry markets are prone to error and manipulation, and their imperfections create great opportunities for waste, unearned rents, and corruption, which I suppose is their principal attraction for the exchanges that make the rules. The excessive spread problem is only one of them. As far as I can tell, the greatest advantage of computer-based systems like Island is that all bids and offers are 100 percent documented and are machine searchable. The SEC can audit those files and charge the responsible parties. I suppose the NASDAQ electronic system is also, but that is a recent improvement as a result of that class-action suit I hope all of us enjoyed.
A pleasure to discuss things with you. |
