As someone who takes great pride in what we do, I too would love to know exactly what you felt was done improperly with that trade? I dont mean this defensively or aggressively but simply as a means of seeing if there was something taht was done less than in line with the standard of our efforts. I looked at the trade , I looked at exactly what transpired and it looked fine. Infact, Bernie had handled the order, one of the best traders in the office. I simply think you are not familiar with opening rotations in options and the illiquidity.
You stated that you simply looked at a quote and since it was 5 bid, that if you entered at that time an offer to sell at 4 3/4, you would assume you were done. That statement is simply wrong. Had it been your offer and THEN you saw it trade through your number (which it never did) it would have been. Rather, your scenario is that you came in when the bid was 5, after opening round, still in opening rotation, and you want to sell with a 4 3/4 low. I thought my post had covered all the issues why you hadnt' gotten done, yet let me restate as it is a good insight into the complexities of options.
1. You had a 100 share lot right after the market opened, AFTER the opening print but before the completion of the market makers opening rotation. THus ,no order, market or otherwise AFTER the initial market opening match, gets done until the market maker in the options works his way down the list/series of various options. Had you had a preopen market order on the option...again..market order on the 100...it would ahve been matched off by the market maker in the option. But you didnt make the opening and then you were stuck in what ends up being a 5 to 15 minute window where the option WILL NOT, CANNOT and wont trade regardless of the market makers changing quote. His quotes usually change because they are on an auto-adjust system based on movements in stock, implied volatility, etc. Once the market maker gets done with all market matches, the series up and down the board, he comes back and opens the stock for "general" trading.
I cant tell you how many times I have personal been in options where the stock does exactly what you wantat the open but the options dont trade for sometime and if you dont go with a market order and miss on a limit by a teenie, you have to wait 10, 15 for it to come around again.
One other issue which compouned the situation was that you did not know the symbol for the option. Given the large number of series and strikes, it took a few moments for us to ensure that you were trading the right option. There is simply noway around it. INfact, that you did not know offhand the symbol actually lead to the wrong one being entered which we would have eaten had something been executed. It was lucky that there was an opening rotation delay else there could have been an error. You can always simply your trading, whether it be in stocks, mutual funds or options if you specifically know the symbol, strike, and optra codes.
You had a limit to sell, and while lower than the bid, the option traded 14 contracts on the opening rotation. By the time it came back around, you had your piece of 30 on the floor, your offer. You simply cant do any better than that because there is no market for the option at any price. After the opening rotation, on any size, particularly 100 contracts, no market maker is going to take your piece in one fell swoop. They would rather not make the market and simply display which is what transpired. Thats about as fair as it gets. No buyer ever took your piece let alone did the stock print there.
There is a reason people say options are illiquid and tough to trade. This was it. YOu are trying to sell a piece of 100 and waited till after the stock opened. You are now stuck in a hold pattern and while the bid/ask moves around nothing can get done because the market maker is dealing with a opening round on a different series.
Again, I felt it was appropriate to address this because 1) it address Alien Techs apparent disappointment in the way a trade was handled 2) its a good lesson for others.
Another small item, a lesson for all traders: Any time you make an error, or mistake, clear out the position. As the option was moving against you, you should have simply sold them. Then we could always discuss the occurence, whether anyone made a mistake worth adjusting a price, etc. But you can't hold the option, if it goes higher you get your limit, if it goes lower at whatever price you ultimately sell, you get your limit as well. Thats unfair on both sides. In law, they call it mitigating damages. YOu cant blow a tire, drive the car for 2000 miles and then after the car explodes, ask for the whole car. You have a duty to mitigate. ITs a legal concept but more importantly a prudent concept for a traders. Taken to the next level, it becomes "keep you losses small, sell the losers and let the winners ride". Trading concepts like these are particularly important for an active trader.
I would welcome an opportunity to discuss this at greater length. And while I wish, (trust me, i like seeing all our clients succeed) someone would have taken your offer at 4 3/4, there was nothing more that could have been done. We spent about 20 minutes with a floor official to ensure that it was infact during the rotation and that the market maker was obligued to take atleast someting. Unfortunately it did not go your way. But please differentiate between the market and us. We are not the casino.
-Steve@yamner.com |
