Decreasing tick sizes
74 comments / March 9, 2010
Euronext announced today to slash the five cent tick size area. Beginning next month on April 1st, all stock options with a value below 50 cents will be trading with a tick size of one cent. This means a market of 0.47 – 0.48 instead of the current 0.45-0.50. The index options will remain unchanged.
At first this seems to be good news for retail investors, as the spreads will narrow. However, Euronext is still reluctant to lower their profit margin and maintains the transaction fees for retail investors and professional traders at high levels. A new trading environment is only for the others.
The exchange hopes to boost trading volume and pocket some extra profits. With the evaporating margins the transaction fees being paid to Euronext should definitely get extra attention. Euronext is very terribly expensive and the share of the profits taken by the exchange is very large when the spread is only one cent. Maybe it really takes another exchange for Euronext wake up and introduce competitive fees.
This so-called Premium Based Tick Size (PBTS) will have some more consequences. First of all, being a liquidity provider and quoting all the series will be a lot less attractive. This could eventually knock out some smaller market makers out of competition – or they will become market taker only. Quoting these kind of narrow spreads will require state-of-the-art technology with fast connections. Something which may be impossible for the small firms.
Thanks for the info trader Bob, but now back to the more important topics like the nasty and frustrated remarks of former All Options and Saen traders which make the icing on this blogs' cake…
So how much is this going to affect profitability for the major market makers?
1 cent spread rulez!!
The major market makers will probably push the small ones out of business. Would happen anyway, but this is a little fast.
5:42 AM Trader Bob, how was your work out in the gym today?
the new tick sizes in the equities market already killed a lot of day traders, and volumes have dumped! Some exchanges recognize this and want to change back to the old tick sizes, but they cannot because the MTF's keep the tick sizes low. If the experience in the cash market is any indication then option market makers will have a very tough time ahead, especially with the current low volumes. Definitely expect the smaller ones to disappear!
welcome to the real world fellas, pretty funny that Euronext havent dropped their exchange fees tho, they want to have it everyway!
Hé, Binck verlaagt z'n tarieven!
http://www.binck.com/nl/welkom/nieuwe_tarieven.asp
NU EURONEXT NOG
mooi voorbeeldje:
een particulier koopt 150calls op 0.13 (markt = 0.11-0.13).
hij legt z'n offer op 0.18, en denkt €750 te verdienen = 38,5%.
Maarrr, Binck rekent nog altijd 300*€2,70 (met dank aan Euronext en clearinghouse) = €810
EN BLIJFT DUS MET EEN VERLIES VAN 60EURO ZITTEN!
Je kan beter verkopen, dan ontvang je geld.
jezus man, het gaat toch om het principe!
bedankt voor je bijdrage
Ik snap het niet. Je kan beter opties verkopen of stukken short gaan, dan ontvang je geld.
Its better to sell options or short shares, because you get paid for it.
Never buy just sell
Ben benieuwd of ze dit doen om TOM de wind uit de zeilen te nemen. Weet iemand al iets meer over de rechtzaak tussen Euronext en TOM?
Klopt helemaal, als je opties koopt dan moet je betalen, als je ze verkoopt dan krijg je geld. Eigenlijk onvoorstelbaar dat er nog mensen zijn die opties kopen.
Kunnen we een top 3 samenstellen van de kleine huizen die als eerste omvallen?
Euronext can't have it both ways. Slash the margin, slash the fees as well.
Dear "TOM-poes",
what a high level of option-theory you are discussing…
I've got only ONE thing to say: GAMMA is the KING!
Gamaar short?
11:20 said, Its better to sell options or short shares, because you get paid for it.
Never buy just sell.
Very risky, you'd better have some very good quatitatives to calculate the settlement price, otherwise you lose huge amount of money if the market changes a lot.
'Its better to sell options or short shares, because you get paid for it
Never buy just sell'
haha, probably the most retarded thing i've ever heard…presumably you were not trading in 2008?
Top 3 handelshuizen die omvallen….tsja, wie zullen dat zijn ?
This new rule does not influence being a PMM / CMM. The ELPS does not force you (as a PMM / CMM) to quote such small margins. Margins were even larger than 5 cents.
It only changes the game in these options a little bit. Before, most MM were quoting the same prices. And time-priority was key. Now there is more room to 'dime' other MM's. A huge improvement (also for auto-MM 🙂 )
But if you short shares or sell options, you can but them back at a lower price.
Am I right?
yeah, or your clearing will buy them for you at a tremendous higher price!
you nitwit, go f#ck yourself
I dont get it.
For example when VOW was at a price level of 1000 and you short 1 share you can buy it back now at aroud 64
Yes, that is absolutely correct..i will only sell from now on
the 9:34 VOW-gay = retarded
re·tard 2 >> 2. A person considered to be foolish or socially inept
9:34 Gay > Wikipedia >
Mental retardation (MR) is a generalized disorder, characterized by significantly impaired cognitive functioning and deficits in two or more adaptive behaviors with onset before the age of 18. It has historically been defined as an Intelligence Quotient score under 70.
Thanks for the advice @9:34! I've just shorted VOW at 71,17 and will buy it back at 64. Maybe I even wait untill it hits 63. I never knew it was so easy to make money.
Selling at 1000 and buying back at 64.
I think its the opposite or MR in this case.
Anyway selling vow at 1000 I hedged it with the vow prefs.
I found out that selling 1000 vow at 1000 and buying 200 vow prefs as a hedge was a perfect combination.
And where did you borrow them ?
Borrow???
I bought them the year before at 120. No borrow needed.
Anyway why asking about borrow?
Is it possible to go short while you dont have the have the shares?
How can you sell something that you dont ow?
Dear Trader Jack,
could you please consider an IP-ban for certain people?! Their comments just waste your website, and don't have any contribution to discussions.
short VOW, great idea…
http://www.telegraph.co.uk/finance/breakingviewscom/4158085/Adolf-Merckle-suicide-gives-crisis-grim-defining-moment.html
Guess he was my counterparty.
1000 lots only
Denk dat Binck zich opmaakt voor een nieuwe 'aanval' van today's group
Broker-tarieven zijn 'boring'.
Euronext + clearinghouse zijn aan de beurt om hun tarieven te verlagen!
wow..what a fuckin discussion going on here..who is this guy with a new theory of "shorting options/shares and buying them back at lower levels" ?
@"Its better to sell options or short shares, because you get paid for it"
Yeah a nice trading model indeed..why dont you come and try it in Asian markets..or let me know where u r executing this bullshit..I wanna be you counterparty….
Its that an offer 11:58 AM to work for you?
no, I just want you to continue your job as a hamburgerflipper at your local Mc'Donalds.
What do you know about flipper?
is he back in the FGBL FGBS?
Hes a dolphin right?
Thanks guys, I'm now dumber after reading all of these retarted comments. You idiot losers should get a life and quit wasting peoples time. Clowns!!!
wasting peoples time?!
then don't read this blog!
bleh, there's a difference between wasting time on reading gossip and wasting time on reading completely random comments that even the authors themselves don't believe
A. new site? affarsmarknaden (business market). Its not wrong to make business on regular terms.
åhjø,
Knäckebröd… Knäckebröd… Knäckebröd!
Ben blij dat ik vroeger op de vloer stond. Hoe kan je nou geld verdienen met zulke spreads? Schiet niet op denk ik. Verdient er iemand uberhaupt nog geld op een verantwoorde manier? Of is hegt een beetje gokken geworden?
euh, met zulke spreads kan je idd bijna geen geld meer verdienen… maar daar heeft Euronext geen boodschap aan. Die voelen de hete adem van TOM in hun nek en gaan het voor de particulier "goedkoper maken" door de tick-size te vernauwen ipv hun eigen tarieven te verlagen.
Toen de vloer op hield te bestaan, was je toen al "klaar" of is de baan die je nu hebt nog steeds noodzakelijk?
Ik heb geen baan. Was klaar ja. Het is maar hoe je er naar kijkt. Leef rustigjes. Geef les over opties in het buitenland. Wie of wat is TOM trouwens. Naar mijn idee ben ik redelijk klaar. hahahahaa tja hoe zeg je dat? Ben gelijk bij de overgang naar schermhandel gestopt. Ik zag het al aankomen. En ik vond de vloer leuk en zag mijzelf niet achter een scherm zitten.
Handel nooit meer eigenlijk.
Mooi verhaal, het is je gegund!
TOM staat voor The Order Machine, een nieuwe beurs voor aandelen en straks ook opties. Een initiatief van Binck en Optiver.
Dank je. Zat nog te lezen over die ontslagen bij imc en all options. Van imc kan ik het mij voorstellen daar ik dat op de vloer al een vervelend bedrijf vond daar ze totaal geen plaats maakten voor de gevoelens van hun mensen. Mijn partner noemde ze een sekte. Alles draait daar om geld. Echter allard Jacobs heb ik altijd een prettige en vooral eerlijke handelaar gevonden. Het is wel allard een optiegoeroe maar wel degelijk een subliem handelaar en eerlijk mens. Met rob defares van imc de grondlegger zeg maar , heb ik nog in de crowed gestaan. Moet zeggen, met alle respect, absoluut niet het level van Allard. Allard was ook beter dan ik ben hoor. Maar Rob? Rene Schelvis was beter stukken(die andere grondlegger). Ik hoop dat jullie werken voor een bedrijf met een hart. Maurizio Scrocca is er zo een een kerel met hart op de goede plaats. Verder alleen succes.Oh ja ook nog met Richard den Drijver in de crowed gestaan. Niet veel die hem mochten naar ik had nooit moeilijkheden met hem. Ik mag hem wel. Slimme zakenman ergens . Hij kan erg hard zijn denk ik. Als handelaar?? Marketmaker?? HHHmmm gaat. Wat is er eigenlijk gebeurd met Paul van der Meij? Vreselijke goede kerel die ik graag weer eens zou willen zien. Als handelaar ook zeer goed. Mocht vroeger wel eens in zijn porsche rijden als ik met hem meelifte naar Breukelen. Meestal als we wat gedronken hadden in Dante. Nam daar de trein naar Utrecht.
Nou succes.
those where the times..
"Its better to sell options or short shares, because you get paid for it"
Wow! let's extend the great business idea. It then follows that if a government (like Spain, Greece et.al.) where to sell options, lots of options, they could repay their state debt in less than 6 months!
That is exactly how Nick Leeson approached recouping his losses, and it worked for him, right?
http://www.veb.net/content/HoofdMenu/Acties/VanderMoolen/actieartikelenVDM/verweerrdd.aspx
Waarom lezen we niks over VDM?
op
http://www.amsterdamtrader.com/2010/02/van-der-moolens-garage-sale.html
staat alles.
Nick Leeson was selling options but buying futures..thats why,to correct Leeson's mistake, a new theory is proposed here :
"Sell options and Sell underlying, because you get paid for it"
Whoever posted this shit..please try it in mkt..then only u will get to know what the fuck u wrote here…
Nobody is that stupid. The guy was joking about selling because you get paid for it!!!
Unbelievable that you and many others are posting that is not gonna work and think he is serious….I'll bet he is laughing his ass off(again).
Are you the idiot who does not make any sense (again)?
Cash is king. Selling is the way to obtain cash.
Short = King
it works 99% of the time
most dutch companies are short premium traders – thats why they did so shit in 97, 98, 2000, 2001. dutch are so tight, they dont want to pay for anything
Kijker niet koper!
and did so well 2003 – 2007?
haha @ 12.20, that makes sense they are tight so they never wanna buy the premium! why didnt more go out of business in 2008 then ???
most dutch companies dont take a lot of risk, so they are normally short premium but not that much (so wont go out of business). compare earnings of drw, mako, liquid to the dutch companies in 1997/1998/2001/2007/2008 – there is no comparison.
imc/all options/ saen/ didnt make much in 2008
and dutch are the tightest race on the planet (with the scottish)
and yet another blow to easy money in 'market making':
http://www.nytimes.com/2010/03/28/business/28gret.html?dbk
The law also closes a gaping tax loophole that allows investors who receive dividends on companies’ shares to pay no taxes on them. The Government Accountability Office estimates that billions of dollars in potential tax revenue are lost each year through the use of so-called dividend equivalent strategies.
so no more tax-stealing uhhh dividend-arbitrage in the US. I wonder how it takes Europe to catch up with this. that would be the end to belabberdty capital management.
unfortunately, this was not April Fool's. at least now my position will close fair!
Wel beter zo, al die quotes op 2 cent.
Hoe is het eigenlijk met opties via Tom ?
De kunst met een kleine spread is een groot volume.
Werkt alleen als die er is en dat je niet alles kwijt bent aan transactie kosten.