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

To: Robespierre who wrote (1511)	4/14/2000 4:49:00 PM
From: Robespierre	Read Replies (2) \| Respond to of 1599

Here's a war story for you Porter. Linamar was bid at $12 this morning. The April 10 Calls were offered at $1.35. In other words the Calls were quoted 65 cents below intrinsic value. In fact, all LNR options were quoted as if the stock was at $10.30 not $12. LNR options haven't traded in weeks. The specialist was showing the same bad quotes last night and probably for days before that. So I enter an order to buy 10 APR 10 calls since 10 lots is the guaranteed fill. I figure as soon as the specialist fills me at $1.35 he'll notice his error, then he'll correctly price the options and I can get out for $2. So I get filled for 10 contracts at $1.35. Five minutes pass and the options are still offered 60 cents below intrinsic value. I call my broker to exercise the calls and sell 1000 shares @ 12. While I'm on hold, the specialist adjusts the price of the options to where they should be. The APR 10 Calls are now bid @ $1.95 with the stock ar $12, which is where they should be. Then my broker (BMO) calls me on the other line and tells me that the trade is busted, no fill at $1.35. THE SPECIALIST BUSTED MY TRADE. This happens once in a while, BMO says, and the specialist can't be held to a bad quote. Bull, I say. I demand that the Nesbitt trader fight for my fill. I don't know if we can do that, BMO says. I insist. So the Montreal Exchange held a governance hearing. While the hearing is going on I don't know if I'm in or out and the market's crashing all around. Guess what? They ruled in my favour. I sold the options back to the specialist @ 1.95. So Porter, what kind of Mickey Mouse operation is this? This LNR specialist is scum. He had no right to bust my trade and I suspect that he knew it all along and felt that there was a good chance that the customer just wouldn't know his rights. And why didn't Nesbitt fight for me? What do I pay them for? Bottom line is that if it wasn't for me the options would still be mispriced and everybody holding these options would be receiving bad quotes and their portfolios would be valued incorrectly. How many trades didn't occur because the quotes were bad? $600 is a very small premium to receive. I'm just upset that I didn't move more contracts. Finally, I am told by the Montreal Exchange that no documentation is made for governance rulings. Question is: under exactly what circumstances does a specialist have the right to bust a trade?