Method and apparatus for stock and index option price improvement, participation, and internalization
A method for stock option trading includes receiving an option order at a market, contemporaneously receiving a copy of the option order at an electronic drop (EDrop) system, which is separate and distinct from the market, obtaining a potential cross quantity and a potential cross price based on the option order at the EDrop system, and submitting, through the EDrop system, a contra-order, with respect to the option order, to the market for fulfillment, wherein the contra-order specifies at least one of an underlying security potential cross quantity, and the potential cross price.
1. A system for trading stock options, comprising:
an electronic order flow provider for generating an option order having a contract identifier, underlying security, strike price, and expiry;
a market in communication with the electronic order flow provider through a network, the market receiving the option order from the electronic order flow provider; and
an electronic drop (EDrop) system connected to the order flow provider, the EDrop system receiving a copy of the option order at substantially the same time as the market receives the option order from the electronic order flow provider, wherein a potential cross quantity and a potential cross price based on the option order is obtained at the EDrop system, and wherein the EDrop system submits a contra-order based on the option order to the market for fulfillment, the contra-order specifying contract elements including the contract identifier, expiry, underlying security potential cross quantity, and the potential cross price.
2. The system of claim 1 , wherein the contra-order is a (i) sell call when the option order is a buy call option order, (ii) a buy call when the option order is a sell call option order, (iii) a sell put when the option order is a buy put option order, and (iv) a buy put when the option order is a sell put option order.
3. The system of claim 1 , further comprising at least one trader terminal, wherein the data regarding at least one of the option order and the contra-order is displayed on said trader terminal.
4. A system for trading stock options, comprising:
an electronic order flow provider for generating an option order having a contract identifier, underlying security, strike price, and expiry;
a market in communication with the electronic order flow provider through a network, the market receiving the option order from the electronic order flow provider; and
an electronic drop (EDrop) system connected to the electronic order flow provider, the EDrop system receiving a copy of the option order at substantially the same time as the market receives the option order from the electronic order flow provider, wherein the EDrop system submits a contra-order based on the option order to the market for fulfillment, the contra-order specifying contract elements, at least some of which are based on the option order.
5. The system of claim 4 , wherein the contra-order is a (i) sell call when the option order is a buy call option order, (ii) a buy call when the option order is a sell call option order, (iii) a sell put when the option order is a buy put option order, and (iv) a buy put when the option order is a sell put option order.
6. The system of claim 4 , further comprising at least one trader terminal, wherein the data regarding at least one of the option order and the contra-order is displayed on said trader terminal.
7. A method of trading in a securities trading network having a market, the method comprising:
receiving an order at the market;
contemporaneously receiving information regarding the order at a server;
automatically identifying contract elements in the order;
automatically obtaining a contra-order based on the order at the server; and
submitting the contra-order to the market for fulfillment.
8. The method of claim 7 , wherein the server is separate and distinct from the market.
9. The method of claim 7 , wherein the order is one of a stock and index option order.
10. The method of claim 7 , wherein receiving comprises receiving an order selected from a group of option orders consisting of buy calls, sell calls, buy puts, and sell puts.
11. The method of claim 10 , wherein submitting comprises submitting a sell call when the order is a buy call order, and submitting a buy call when the order is a sell call order.
12. The method of claim 10 , wherein submitting comprises submitting a sell put when the order is a buy put order, and submitting a buy put when the order is a sell put order.
13. The method of claim 7 , wherein receiving comprises receiving the order from an order flow provider that contemporaneously submits the information regarding the order to the server.
14. The method of claim 13 , further comprising the step of translating the order from an order flow provider format into an internal trading system format, and wherein submitting comprises submitting the contra-order in a market format.
15. The method of claim 14 , wherein receiving further comprises receiving an additional option order from an additional order flow provider, and further comprising translating the additional option order from an additional order flow provider format into the internal trading system format.
16. The method of claim 7 , further comprising displaying at least an underlying security, an option quantity, at least one of an option bid price and option ask price, and an ask price at a trader terminal, and monitoring the trader terminal for a submit indicator.
17. The method of claim 16 , wherein displaying further comprises displaying underlying security bid and ask prices at the market.
18. The method of claim 17 , wherein displaying further comprises displaying risk management variables.
19. The method of claim 7 , further comprising applying a filter to the order before determining a potential cross quantity.
20. The method of claim 19 , further comprising storing the order in a filtered database when the order passes the filter.
21. The method of claim 7 , further comprising storing the order in an unfiltered database.
22. A method of trading a security, the method comprising:
transmitting information regarding an order from an electronic order flow provider to a first server; and
automatically submitting a contra-order based on the order to at least one of the first server and a second server within the market for fulfillment, wherein the contra-order specifies at least one of an underlying security potential cross quantity, and the potential cross price.
23. The method of claim 22 , wherein the first server is separate and distinct from the market.
24. The method of claim 22 , wherein the order is one of a stock and index option order.
25. The method of claim 22 , further comprising receiving the order at the market.
26. The method of claim 25 , wherein the order is selected from a group of option orders consisting of buy calls, sell calls, buy puts, and sell puts.
27. The method of claim 22 , wherein submitting comprises submitting a sell call when the order is a buy call order, and submitting a buy call when the order is a sell call order.
28. The method of claim 22 , wherein submitting comprises submitting a sell put when the order is a buy put order, and submitting a buy put when the order is a sell put order.
29. The method of claim 22 , further comprising translating the order from an order flow provider format into an internal trading system format, and wherein submitting comprises submitting the contra-order in a market format.
30. The method of claim 22 , further comprising displaying at least an underlying security, an option quantity, at least one of an option bid price and option ask price, and an ask price at a trader terminal, and monitoring the trader terminal for a submit indicator.
31. The method of claim 30 , wherein displaying further comprises displaying underlying security bid and ask prices at the market.
32. The method of claim 31 , wherein displaying further comprises displaying risk management variables.
33. The method of claim 22 , further comprising the step of applying a filter to the order before determining the potential cross quantity.
34. The method of claim 33 , further comprising storing the order in a filtered database when the option order passes the filter.
35. The method of claim 22 , wherein the first server is included within an electronic drop (EDrop) system.
36. The method of claim 22 , wherein the information regarding the order is a copy of the order.
37. The method of claim 22 , further comprising submitting the order to the second server within the market; and wherein said transmitting comprises contemporaneously transmitting information regarding the order from the order flow provider to the first server during said submitting.
38. The method of claim 22 , further comprising obtaining a potential cross quantity and a potential cross price based on the order at the first server before said submitting.
39. The method of claim 38 , wherein said obtaining comprises automatically obtaining a potential cross quantity and potential cross price.
40. The method of claim 22 , further comprising interconnecting the market to at least one other market.
41. The method of claim 22 , wherein the information regarding the option order is the option order.
42. A trading network system, comprising:
an electronic order flow provider for generating an order having a contract identifier, underlying security, strike price, and expiry;
a market in communication with the electronic order flow provider through a network, the market configured to receive the order; and
a server in communication with the electronic order flow provider and the market, the server receiving information regarding the order, wherein a potential cross quantity and a potential cross price based on the order is obtained at the server, and wherein the server submits a contra-order based on the order to the market for fulfillment.
43. The system of claim 42 , wherein said server is remote from the market.
44. The system of claim 42 , wherein the order is one of a stock and index option order.
45. The system of claim 42 , wherein the information regarding the option order is a copy of the option order.
46. The system of claim 42 , further comprising at least one other market interconnected with the market.
47. The system of claim 42 , wherein the information regarding the option order is the option order.
48. The system of claim 42 , wherein the contra-order specifies contract elements including the contract identifier, expiry, underlying security potential cross quantity, and the potential cross price.