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 method for stock option trading comprising:
receiving an option order at a market;
contemporaneously receiving a copy of the option order at an electronic drop (EDrop) system; and
automatically generating a contra-order based on the copy of the option order received at the EDrop system, wherein the contra-order specifies at least one of an underlying security potential cross quantity, and the potential cross price.
2. The method of claim 1 , wherein receiving comprises receiving an option order selected from the group of option orders consisting of buy calls, sell calls, buy puts, and sell puts.
3. The method of claim 2 , wherein submitting comprises submitting a sell call when the option order is a buy call option order, and submitting a buy call when the option order is a sell call option order.
4. The method of claim 3 , wherein submitting comprises submitting a sell put when the option order is a buy put option order, and submitting a buy put when the option order is a sell put option order.
5. The method of claim 1 , wherein receiving comprises receiving the option order from an order flow provider that contemporaneously submits the copy of the option order to the EDrop system.
6. The method of claim 1 , further comprising the step of translating the option 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.
7. The method of claim 6 , 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.
8. The method of claim 1 , further comprising displaying at least an underlying security, am 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.
9. The method of claim 8 , wherein displaying further comprises displaying underlying security bid and ask prices at the market.
10. The method of claim 9 , wherein displaying further comprises displaying risk management variables.
11. The method of claim 1 , further comprising the step of applying a filter to the option order before determining the potential cross quantity.
12. The method of claim 11 , further comprising storing the option order in a filtered database when the option order passes the filter.
13. The method of claim 1 , further comprising storing the option order in an unfiltered database.
14. A method of trading in a securities trading network having a market, the method comprising:
receiving information regarding an order sent to a market at a server;
automatically obtaining a contra-order based on the order at the server; and
submitting the contra-order to the market for fulfillment.
15. The method of claim 14 , wherein the server is separate and distinct from the market.
16. The method of claim 14 , wherein the order is one of a stock and index option order.
17. The method of claim 14 , wherein receiving comprises receiving an order selected from a group of option orders consisting of buy calls, sell calls, buy puts, and sell puts.
18. The method of claim 17 , 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.
19. The method of claim 17 , 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.
20. A trading network system, comprising:
an electronic order flow provider for generating an order;
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, and wherein the server generates a contra-order based on the order to the market for fulfillment.
21. A method of stock option trading comprising:
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;
identifying contract elements in the option order including a contract identifier, underlying securing, strike price, and expiry;
obtaining a potential cross quantity and a potential cross price based on the option order at the EDrop system; and
submitting a contra-order, with respect to the option order, to the market.