Interactive Brokers and Options trading in Australia

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

The pricing on your spreads now appear normal (without minus symbols).
You must have quite a bit of clout, i'm still waiting for XJO options to be turned on.

Thanks for the heads up, Cutz. Haven't loaded TWS yet - so will go and check! Be surprised if I had any clout - perhaps it helped emailing directly to Kiera at the Oz office (she does the Oz TWS webinars). Perhaps nobody has brought it to their attention before...

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Yes you are right, Cutz. Looking much better now

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Good Morning All,

I have I small query regarding spread orders, this morning I put an order in just in front of the bid of the spread indicative price but my price didn’t up, I then got worried and cancelled. I’m I correct in saying that because it’s only an indicative spread price my order won’t be seen ?

In this case how is a spread order best managed, should i just place mine right in the middle ? Any thoughts.

BTW i'm looking at BHP which is fairly liquid and the spreads are tight.

Thanks in advance

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Cutz, got to go out soon and I will need to load up TWS and then have a play with it to see if I can help you out. Will come back later...

Hopefully Wayne might know the answer...

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Cutz,

I put in a buy order for a put calendar in to see what would happen(entered it considerably below the bid price as I don't really want it!)

I compared TWS market depth of the two individual puts against Iress depth and it looks like TWS only gives the first line of market depth.

And as you found out, my order also didn't appear in TWS market depth for the spread. On the surface, it looks like the spread market depth quotes in TWS are simply generated from the market depth of the two individual put depths, and so, are unlikely to appear in that window. It doesn't seem to be a designated market depth such as I get when my broker sets the combo for me and then gives me an ASX generated code so I can actually see my order in that unique market depth window for that spread. Often I'm the only one there - occasionally there might be someone else. Sometimes a MM will come in on the opposing side with a counter bid/offer. That seems unlikely to happen in the TWS spread depth window.

I did see my order in both of the individual option depth windows in Iress, but had to click on "detail" to get all the available levels. eg. I could see the buy leg on the bid of Feb puts and the sell leg on the ask of the Jan puts. However, because I had put the order in so far below the spread bid price, it was last on the queue of both options. I knew it was mine because it was only a 1 lot and they disappeared as soon as I cancelled.

Looks like TWS has some limitations with market depth and the spread market depth appears to not be the real depth for that individual spread. Next time I place a spread order through Iress, I will compare the market depth windows again.

At least you still have Iress market depth to get a good idea of where mid price might be and to see where you are in the queue of the individual options. And then use the convenience of TWS to actually enter your orders into the market.

Does this help? It's not real easy to explain...

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Thanks Sails,

Yep it makes perfect sense, opening up depth windows in iress to monitor the two legs and pushing the order through TWS.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Thanks Sails,

Yep it makes perfect sense, opening up depth windows in iress to monitor the two legs and pushing the order through TWS.

Glad to hear it made some sense! Just a thought - I would never use the bid/ask prices of spreads in TWS as it appears they are simply taken from the 1st layer of depth. I find it better to try and establish where the MMs are in the depth (on Iress) and then work out approx mid prices from there. Most unlikely you will get the mid price or better as the MMs need to make a crust - but hopefully you will get closer to it than legging it.

I watch depth of all options in the combo very closely - if the MMs are refusing my price and I see a better price by legging it - I am quick to cancel the order (or adjust the price so it won't be taken) and proceed to get the better deal. I also watch where my order is in the individual option legs - can sometimes give a clue as to how much I need to adjust.

Once you start working with spreads, won't take you long to get a feel for them.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

I tried to enter a butterfly order into TWS. Got an error message that it's not supported by the exchange

Does anyone know if this is a glitch at the moment - or are there some option combos that can't be traded through IB?

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

Yep i came across that error a couple of weeks ago, but it only happened once and it cleared itself the following day.

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Hello again Sails,

Butterflys seem to be working at my end.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Thanks for the reply, Cutz. Hopefully it will sort itself out. Might send in a ticket later and see if they can explain why it didn't work today. Would be annoying if trying to close a butterfly and then having to leg out...

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

G’Day everyone,

Has anyone been assigned on aussie stocks, I received my first on IB today.

Reason I ask is I received confirmation that 2 MQG May27 call options were assigned, that’s OK because I own the underlying and I can deliver, problem is I’ve also got a decent split month (dunno what else to call it) call backspread on with the lower strike at the 30 May ex, I noticed in the iress course of sales a few 30’s were assigned this morning so I suspect I may get hit up tomorrow.

Because of our short selling restriction how will this be handled if assignment occurs? Will an automatic buy at the open occur which will be allocated for delivery?

Thanks everyone, as you have all noticed not my best week, to many things going on (for a learner).

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Cutz,

I think you were very fortunate you had the stock as I think you only have until 10:10 am to deal with any naked positions. If you had an ITM long call instead of owning the stock, I think you have to authorise exercise before 10:10am. If you don't have the stock or don't exercise a long covering option (or don't to exercise it because it has too much premikum) or don't deal with the short stock yourself, IBs software may randomly start closing out your other positions that may not have a thing to do with the assigned call.

I have never been assigned with IB, but Steve from IB confirmed the above when he first came on to ASF to advise that IB was coming to Australia. Whether they have changed their rules, I don't know. I explained to him that our market doesn't fully open until 10:10, but he insisted that was their policy. So if you are in WOW, WBC that opens last, there wouldn't be much time to do anything with IB.

I think MQG went X-div yesterday which would explain your early call exercise. I saw a heap of puts were exercised this morning which is also normal the day after X-div. If you didn't own the covering stock, you would have also been liable for the dividend - scary thought

Not sure if you realise that option assignments showing up in the course of sales in the morning actually means they were exercised the day before. It would appear that you were OK with your further out 30 calls, but it's not uncommon for further out month calls to be exercised for the dividend. Hoadley has a nice little feature where you can check the probability of your calls being exercised early for the dividend.

Hope this helps and all the best. Can be pretty unnerving when these things happen and I can certainly relate to that...

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

Yeah, i was aware of the course of sales (assignments from previous biz day), i was up early this morning to check on iress and there were no 30 calls exercised, what a relief

I do want to hang on to this position so waking up with a short underlying would be a better alternative than having to buy on market to deliver and being left with an OTM long call swinging in the breeze, hopefully one day the Australian rules will change to be more option trader friendly.

I think i have to be on high alert on this one, i like the risk profile but being assigned would muck it up.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

Yeah, i was aware of the course of sales, i was up early this morning to check on iress and there were no 30 calls exercised, what a relief

I do want to hang on to this position so waking up with a short underlying would be a better alternative than having to buy on market to deliver and being left with an OTM long call swinging in the breeze, hopefully on day the Australian rules will change to be more option trader friendly.

I think i have to be on high alert on this one, i like the risk profile but being assigned would muck it up.

Ok - wasn't sure if you were aware about the course of sales. Anyway, it might help someone else somewhere down the track!

At least with the xdiv day over now, there is less risk of assignment unless the ITM calls lose their extrinsic value as time passes or if mqg starts to climb again. But I think you would already know all that.

I think the free Hoadley tool shows early exercise risk on all options - not just for dividends. Might be worth checking up on it if your calls remain ITM.

 

[Trembling Hand]

Re: Interactive Brokers and Options trading in OZ

Anyone traded XJO or SPI oppies with IB?

Cannot seem to get any XJO data in the Optiontrader thingo

Fine for ASX stocks.

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

I just found it, comes up with early exercise not optimal, but i should go over it and check all my inputs just in case.

BTW, I appreciate all the help and patience you’ve been giving us new guys, hope I haven’t been to much of a pest, sometimes things can get a little stressful when the unexpected happens.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Anyone traded XJO or SPI oppies with IB?

Cannot seem to get any XJO data in the Optiontrader thingo

Fine for ASX stocks.

I don't think you can trade XJO options with IB, but you can get SPI options. Just type SPI into the "Underlying" column of TWS, hit enter and you can choose futures options, etc, etc.

I have occasionally looked at the option chains in Option Trader window, but there is rarely any quotes. Looks like you would have to do a quote request. The lack of quotes seem strange as there seems to be a fair bit of decent volume at times. Anyway, I usually check here in the morning to see what's been going on: http://www.asx.com.au/sfe/daily_monthly_reports.htm

 

[cutz]

Re: Interactive Brokers and Options trading in OZ

Anyone traded XJO or SPI oppies with IB?

Cannot seem to get any XJO data in the Optiontrader thingo

Fine for ASX stocks.

Hi TH,

Yeah i trade them, use AP, it's actually is the code for XJO options funnily enough.

 

[sails]

Re: Interactive Brokers and Options trading in OZ

Hi Sails,

I just found it, comes up with early exercise not optimal, but i should go over it and check all my inputs just in case.

BTW, I appreciate all the help and patience you’ve been giving us new guys, hope I haven’t been to much of a pest, sometimes things can get a little stressful when the unexpected happens.

No worries, Cutz - it can get a bit stressful when the learning curve steepens and I don't think too many option educators out there deal with some of these practical issues that can end up being costly.