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Dick,
The person you spoke to at Dreyfus was "apparently" making things up as he went
along. First and foremost why would any multiply listed option not route to the
best exchange? Why does Dreyfus go to PHLX....both CBOE and AMEX guarantee best
market fill or the order ships back to the brokerage firms booth. Secondly
RAE's eligibility NEVER changes in equity opions...however when you say RAEs you
are referring to CBOE's system .. not a system that exists elsewhere. At the
PHLX there automated system is called something else, I forget what, but if the
order had gone to CBOE or AMEX it would have been auto executed .. if the market
at CBOE or AMEX isn't the best market it doesn't auto exec ... the crowd gets a
FOK opportunity to match the best market as displayed(all the exchange trading
crowds have what are called "dual' screens" showing the other exchanges
disseminated markets)and if they choose not to - the order immediately goes back
to dreyfus to ship away. Also all the automated systems can't take fifteen
minutes to fill ... If the system is up it fills .....if your limit is not
marketable and no fill occurs at the Philly it becomes a paper order and it
sounds like at that point the order "may" have been mishandled. At CBOE if the
order is not at a marketable limit it either prints in the crowd with a broker
standing in the crowd(or on their workstation) or goes directly to the
electronic order book. In the ebook it would have priority at it's limit(time
priority exists as well so other orders ahead may be an issue). You might also
need to be aware of the fact that there has been some turnover in the senior
management at dreyfus and I sincerely hope that is impacting the quality of
service. The root question is why send the order to the Philly .... very few
multiply traded option have the Philly as their primary(I thought the number was
actually zero, but apparently it is at least one) now you know why
Dick Crotinger wrote:
> 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
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