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June 30, 2005
Pacific Exchange To Trade Options In Pennies
Following the Boston Option Exchange's PIP initiative, the Pacific Exchange announced this week that it will "begin quoting and trading all listed options in penny increments". The Exchange will submit the necessary rule filing soon, and hopes to receive expedited approval from the SEC so that it can begin trading options in pennies in the fourth quarter of 2005.
This is great news for options traders; by routing your orders to these exchanges, or using "smart" routing features offered by some brokers, you can significantly narrow the bid/ask spread on option trades. For option strategies involving 2 or more legs (e.g. spreads, butterflies), the move to penny quotes will result in a huge improvement in returns (expectancy)!
I look forward to the day when this is offered by the larger options exchanges (ISE, CBOE), so that we can take advantange of the liquidity as well. On this note, its interesting to see the BOX steadily increase its market share every month. Deep discount option brokers, fully electronic exchanges, and narrow option spreads are the way to go!
Posted by galatime at June 30, 2005 01:00 PM
Comments
Why did NitroMed (NTMD) only increase 13% on news that it would begin sales of its drug BilDil by 7 July? Based on the market for Nitric Oxide drugs BilDil should bring sales of $220 million by 4Q 2005 and $550M by 3Q 2006. That would put NTMD's book value at $42/share. It is currently priced at $22/sh. Why is there such an unvaluation of this stock. Is it still undiscovered?
Posted by: Bioguy at July 2, 2005 05:18 PM