Sneaky Options Algo

Note from the Publisher:  We haven’t covered a lot on trading technology of late, so we thought today we would delve a bit further into that.  We found an interesing piece on Wolverine Execution Services which is helping traders to use their algorithms to sweep the market for options orders that only reveal a small portion of the actual trade (referred to as icebergs).  The WEX algorithms also help traders maintain some anonymity on the full size of their options trades while sourcing the market for other blocks of options.  WHAT A SNEAKY bunch, those traders are, right?!  It’s all about gaining the edge, though, isn’t it.  BTW, we thought you’d enjoy the old picture from the CBOE floor.  We’re not sure of the year it was taken, but we’d guess it was circa 70’s, as the CBOE celebrated its 40th anniversary in 2016. 

“Come out, come out wherever you are.

Liquidity, that is.

In a move designed to help buy side traders find liquidity for their single- and multi-leg options orders, Wolverine Execution Services (WEX) has modified its Sweep X and Sweep Spread algorithms to now consider hidden orders and probe for liquidity on options exchanges. This new functionality is designed to help a trader’s orders to stay hidden and maintain anonymity when sourcing either blocks or smaller size trades.

A hidden order (or iceberg) is an order type where the broker is required to display only a small part of the order. They are commonly used to protect an investor from adverse price selection when he has a block order to execute. Several exchanges, both in options and equities, allow the use of hidden orders.

‘At WEX, we are constantly improving our algorithms to meet the evolving needs of our clients,’ said Troy Googins, head of WEX product and business development, referring to Sweep X and Sweep Spread. ‘It’s still critical to provide efficient ways to manage the remaining portion of an order. By remaining hidden, clients can mask their intentions while the order works within the market.’

Call it a way to trade darkly or akin to placing an order in an options dark pool.”

Read Full Article at Tradersmagazine