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RAES< POETS<AUTOEX, etc. are the automated systems of the various option
exchanges. Essentially they allow electronic trading of options. Their
actual features vary from exchange to exchange. RAES currently is a 20 up
market. 20 up means simply buy up to 20 contracts at the offering quote and
sell up to 20 contracts at the bid. It is larger than 20 in some trading
crowds...for example in it 50 up in the Dow Jones Index. It is available on
all orders sent to the CBOE...trading from a Level II is not relevant to
options.
The challenge to electronic trading is that electronic fills are a form of
instant gratification in options and in some issues an "inside" market may
actually exist. For example in SPX options(S & P 500) the screen quotes,
which is what RAE is driven off of, is generally 500 - 5000 up, a users
wishing to trade a 10 lot using RAE might be subject to b/a spread that
reflects the 500 - 5000 market as opposed to the real market for a 10 lot
which might be tighter. The electronic trading rules change frequently so
that there is really "no book" about the systems. The best resource is
probably the individual exchanges web sites. The exchanges are also in the
process of consolidating so that shortly, if consolidation is successful you
will have only two systems...the Amex's AMOS and the CBOE RAE. Sometime
after 1/1/2000 you may also the opportunity to trade equity `options on new
proposed all electronic exchange(the ISE). The proposed all electronic
exchange will trade equity options only... no index options.
Joe Frabosilio wrote:
> I'm looking to trade equity options threw a level II firm. What I would
> like to know is what is RAES and other order routeing systems with
> options? Is there a book that explains the different ways to execute an
> option trade using these routeing systems?
>
> Thanks,
>
> Joe Frabosilio
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