MARKETS & TRADING

[Not_Bill_Oneil]

Options - better pricing...

Interactive Brokers today started offering their customers penny-increment pricing on option limit orders on certain issues listed through the International Securities Exchange (ISE) and Boston options exchange (BOX).

There are limitations currently with this and the NBBO (National Best Bid or Offer) and who actually sees your inside increment order. And some people are critical on some issues that the BOX (which was set up as a joint venture with IB) also gives brokerage firms the ability to take the other side of a customer's order through their "price-improvement period" (PIP). There is lots to consider and read on this issue.

But, overall, I believe it is another step in the right direction for greater options liquidity as more and more people trade options based on electronic platform exchanges and more exchanges will have to compete with better pricing. Ultimately leading to more transparent and increased options liquidity that also follows stock decimalization. And as a side, actually better stock liquidity for issues with high corresponding liquid options; based on related program trading as well as market maker and fund hedging. Case in point - GOOG.

More background info on the electronic exchanges working with IB: http://www.optionetics.com/market/articles/article.asp?id=9755

Price Improvement - see links: http://bostonoptions.com/