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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Jill who wrote (28993)	9/1/1999 5:31:00 PM
From: taxman	Read Replies (1) \| Respond to of 74651

"when spreads narrow, does that mean implied volatility is less?" no "Why else would spreads narrow?" more competition among market makers or even from public option traders. regards

To: Jill who wrote (28993)	9/1/1999 5:37:00 PM
From: t2	Read Replies (3) \| Respond to of 74651

If QCOM's options get listed on more than one exchange, there will be competition between the exchanges to provide the best price. The bid goes up and the ask goes down. It is the market makers in options who are probably losing out. I would bet that if Q options were listed on at least 2 exchanges, you would not see spreads over $2. Notice how at certain prices (thinly traded options) it is always the same spread. With 2 listings, one will try to offer a better price so the order gets directed to that exchange. It is just competition. I was just amazed how the spreads narrowed on MSFT after the competition in MSFT options began. Taxman can probably explain more on how the options exchanges work---i have not read too much about it. for the 155 I believe the spread was 3 and l/4 and 4 but the market was moving so fast I just placed it for 4 for the day and it filled immediately... in a fast moving market the quotes are not very reliable but in a normal market you would have received an upto date quote and you would have been at the ask for a while unless the stock itself moved. With the stock moving so much during the day, the options prices were probably all over the place and your quote was incorrect. I had an order to buy back some calls that i had sold---sept 180s---bid was 5 1/2 to 6 and i got filled at 5 1/4 on a market buy order (should have waited a little longer to send that order--oh well). That just means i did not have the true quote when i placed the order; otherwise, i should have bought them back at 6 not 5 1/4. Implied Volatility should not really change. The halfway point between the bid and ask will probably remain the same---it would just be a increase in the bid and a decrease in the asking price. The buyer and seller just get better prices. Maybe someone can explain more on how the exchanges work.