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Robert,
The answer is I'm not sure .. by there are a number of assumptions you make
which are factually incorrect.
"I placed Limit orders to sell using the current bid which means they did not go
through RAES but to the CBOE book" RAES DOES ACCEPT LIMIT ORDERS AND WILL
FILL A MARKETABLE LIMIT. IF THE LIMIT WAS NOT MARKETABLE YOUR ORDER DOESN'T
AUTOMATICALLY GO TO THE CBOE BOOK. MANY BROKERAGE HOUSES - TO SAVE COSTS -
SIMPLY DON'T USE THE BOOK. THE BOOK AT A CHARGE (IN INDEX OPTIONS)AND I
SUSPECT THAT YOUR BROKER ...ALTHOUGH I DON'T KNOW SPECIFICALLY AND PREFERRED
TRADE HAS A REPUTATION FOR DOING A GREAT JOB........SIMPLY PRINTED THE LIMIT
ORDER ON A WORKSTATION IN THE CROWD.....YOU'LL NEED TO ASK THEM.
AS TO THE TREATMENT OF LARGE ORDERS AS OPPOSED TO SMALL ORDERS. SMALL ORDERS
ARE GO OVER THE WORKSTATIONS AND LARGE ORDERS CAN BE WORKSTATIONS OR MANUALLY
DONE. TRADING VOLUME WAS MODEST YESTERDAY AND ALTHOUGH I WASN'T AT CBOE I WAS
FLYING BACK FROM A PHILLY SEMINAR .. I DID NOT HEAR OF ANY TRADING PROBLEMS BUT
THAT DOESN'T MEAN THERE WEREN'T ANY.
1. GET TIME AND SALES
2. FIND OUT WHERE YOUR ORDER WAS. IF YOUR BROKER SENT THE ORDER TO THE E BOOK
.. AS YOU ASSUME....THEN (unless there were orders ahead in the book)ENTITLES
TO A FILL. I'LL VENTURE ONE OF TWO THINGS HAPPENED.
1. A FAST MARKET WAS IN FACT IN FORCE AND WHEN THAT HAPPENS TRADETHROUGHS ARE
POSSIBLE
2. P . T. ROUTED THE ORDER TO A BROKER AS OPPOSED TO THE BOOK ... WHICH IS WHAT
I STRONGLY SUSPECT AND WHAT THEY SHOULD HAVE DONE IF IT WAS ONLY A COUPLE OF
TICKS FROM THE CURRENT MARKET...AND IN THE INTERIM THE MARKET MOVED. MANY FIRMS
CHOOSE TO USE A BROKER IN THE CROWD IF THE ORDER IS ONLY A COUPLE TICKS FROM THE
MARKET AND "BOOK" STUFF MORE THAN A FEW TICKS AWAY. HAVE YOU ASKED THEM?
THE FACT THAT YOU WERE FILLED AUTOMATICALLY LATER LEADS ME TO BELIEVE THAT
EVERYTHING WAS UP AND RUNNING NORMALLY.
I'M HOME WHILE I WRITE THIS AND I HAVE NO WAY TO DO ANY ADDITIONAL RESEARCH, BUT
THE FIRST THING I WOULD DO IS GET TIME AND SALES AND THEN AS P.T. WHAT OCCURRED?
ROBERT ROESKE wrote:
> Dear doctorOEX,
> I experienced a problem on Friday that perhaps you could explain. Thursday
> PM I bought a five lot of November 720 OEX puts through Preferred Trade
> online brokerage. Friday morning the market rallied a bit on the open and I
> bought a 5 lot of Nov 725 puts. Then the OEX began sliding and the puts
> went deep in the money. I placed limit orders to sell(using the current
> Bid) which means they did not go through RAES but into the CBOE book I
> think. OEX was slidding pretty fast and obviously the limit prices were
> exceeded and the orders should have been filled but no confirmation from the
> CBOE came. I got on the instant messanger with Preferred Trade and they
> said they were not getting confirmations back from the CBOE. OEX continued
> to slide to 715, still no confirmations. OEX turned up and I got on the
> voice phone to Preferred Trade and they said they were not sure what the
> problem was but that they could not get confirmations by phone either and
> there was no responce back from the CBOE on their datalink. Meanwhile the
> OEX began its move up and the 720 went into a loss and the 725 had minor
> gains. Finally PT erased the sell orders from my account and I reentered
> them as market orders and they filled instantly. What I would like to know
> is were your buddies on the floor too busy handling the big orders ignoring
> my tiny five lots or was the book too full to get around to mine before the
> market turned. Did the flow rate of orders even come close to stretching
> the capacity of serving retail clients? Additionally, was RAES functioning
> properly Friday morning on the dip to 715 and would those initial sell
> orders have been better served by RAES? Was RAES functioning properly
> Friday morning? Were they infact routed to a book that was not serviced in
> a timely manner because of other priorities? Thanks for your answers and
> insight to exiting oex positions during busy times.
>
> Bob Roeske,
> one pissed off trader
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