OPTN: How can they do that? (here's how)

["Dick Crotinger" <dangle@xxxxxxx>]

I bleated here a couple of weeks ago about closing a long call stock option
trade "at the market" and watching the bid price drop momentarily to
accomodate me.  Those who responded seemed to indicate, "that's what you get
for closing a trade 'at the market'."

Not one to learn my lessons easily, I opened another long call position in
the same option, subsequent series, last week.  It continued to go against
me this week, so I decided to close it today, at a limit equal to the
current bid.  The market was 5/16 bid, 7/16 offered, and I offered 10 at
5/16.  My DTN/Ensign screen showed bid and offer both at 3/8, but I know not
to trust it (isn't that sad?).  I trade over the net via Dreyfus.

It did in fact fill at my limit, taking 15 minutes to fill near the close of
trading.  My Ensign screen showed my offer becoming the current offer, with
the bid remaining as previously posted, i.e., bid at 3/8, asked at 5/16
(sic).  The Dreyfus quote remained bid at 5/16, offered at 7/16.
Immediately as my trade filled, 25 more contracts filled at 7/16, and after
the close I decided to give the folks at Dreyfus a call and find out what
was going on.

I talked to a supervisor, and was told that options on this particular
market (Triton Energy - symbol 'OIL') trade on all four options exchanges,
with the primary being the PHLX.  Much to my surprise, the Dreyfus quote
(which I got when the trade was placed... a "realtime" quote) reflects the
current LOWEST offer and HIGHEST bid from each of the four exchanges, and at
the time I submitted my trade, the CBOE quote (unknown to me) was 3/16 bid,
3/8 asked.  This then represented the actual market on the bid side, even
though the reflection on the Dreyfus quote screen was for 5/16.  I asked
about REAS eligibility, and was told that IT CHANGES THROUGHOUT THE DAY...
some markets that open "eligible" even revert later in the day, and vice
versa.  And of course none of this is reflected, either on the DTN screen or
the Dreyfus order screen.

DBC/BMI quit carrying the quotes for the different exchanges last fall
("enhancing" their service), and to my knowledge, DTN has never indicated
different quotes per exchange.  Unless I quit trading over the net and place
my orders thru a broker, I know of no way to gain access to this
information.  And even the guy at Dreyfus said, "don't count on it..."

The options exchanges reputedly wonder why the public orders are drying up.
It's because SOME of us are discovering that you can't trade against this
kind of stacked deck.  No wonder the news services call it "gambling."

a very frustrated...
Dick Crotinger