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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: Matthew B. who wrote (1711)	12/10/1997 1:13:00 PM
From: steve goldman	Respond to of 12617

You never know. It could be just an 1/8 or it could be a couple of dollars. On the day after the market crash of 550, limit sell orders atthe open were getting filled at 3/4, 1 buck above the limit. Now we all know what a crazy day that was, but the point is you never know. You not only have to compute the effect of the order flow, but the potential that a firm doesnt work the order at all. Example, some firms claim they dont route for order flow, but they don't claim they work your order. Ie. you want to buy dell, you give me a buy order with a limit, the stock is tanking and falls below your limit. I can now setup youup on the soes system and let it run lower. Everytimethe stock moves lower, I move the soes lower, neverhaving hit the button yet. maybe I even call you and say, hey dell is down 2 the market looks ugly,lets wait a while. maybe you save the 1 point dell fell and the 2 it fell afterward. If I dont call, cant call or know you absolutely want it, when it looks to bottom out, i hit the button,right ont he nasdaq soes circuit. You get it, some percentage below where you original submitted your price, below your price. Doesnt protect you if the stock tanks another 30 points, but then thats not execution qualiyt, that's investment decision. If a firm nondiscriminatorily routes orders, you never know what your price improvement or protection could havebeen. You know your limit. you know you wont pay more. You wont pay 90 for a dell order you had a 89 buy limit on. You just never know the upside for you. (actually your upside, I guess, might be the low for the day) but you understand my point. Most firms wouldn't dare to try to make spreads on options since they are so illiquid relative to the stock and might get caught on the wrong side. SO they keep costs low. They do so byrouting to the cheapest exchange even where a more liquid exchange, even with perhaps a better quote is avaialble. Regards, Steve Regards, Steve