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Strategies & Market Trends : Canadian Options -- Ignore unavailable to you. Want to Upgrade?

To: Porter Davis who wrote (1510)	4/13/2000 12:47:00 PM
From: Robespierre	Read Replies (1) \| Respond to of 1599

US Markets are much tighter but only if you're looking at the best bid/ask and not the OPRA quote. I'll bet you 90% of US options traders do not get access to best execution because of brokers internalizing trades or payment for order flow. Currently the APR 110 Calls are Bid 2 7/16 on Phili and Ask 2 1/2 on Pacific for a spread of 6.25cents US = 9Cents Canadian. Your APR 170 Calls are Bid 2.35 Ask 2.65 for a spread of 30Cents Canadian which is more than 3X higher. You may be able to pull off more volume in Montreal but for a retail trader whose trading less than 20 lots the US market is way, way better. It doesn't interest me that you can make markets 100 lots deep for pro arbs. Even if Pro arbs are trading small quantities in the US, they can't send their orders via the automated systems. Only retail investors have access to the automated options trading systems in the US. That's why the US options market is "inefficient" and you sometimes get Bid/Ask spreads of -1/16. Basically my trade was due to fact that I have a futures position in the S&P TSE 60 but sometimes I really want to have a futures position in the S&P TSE 58, if you know what I mean. We didn't have these problems with the TXF because there was a limit to 10% for any one stock. Anyway, since my transaction costs are so low for Nortel options in the US, I can create a synthetic S&P 58 position easily. Yesterday I sold the futures (and they happened to be rich) then I offset part of my negative Nortel/BCE deltas with ITM call options. If I sell the futures rich and trade the options at fair value its a great deal because BCE and Nortel have such a large weight in the index. Anyway it more than covers my transcation costs.