Multi-Listed Stock Optionsare stock that have options that are listed on more than one exchange. When stock options are listed on three or more exchanges, a competitive market is likely to exist. Traders should try to avoid options that are only listed on one exchange. The Market Maker on that exchange knows that the trader can’t go elsewhere to get filled and they will not budge on their price. Option exchanges determine whether there is enough demand to justify listing stock options for a particular equity on their exchange. There are fixed costs that are involved and they need volume to cover these costs. When trading multi-listed stock options, I suggest working the order from one option exchange to another. Often, the other side of your trade will fit nicely into a Market Maker’s position and one of the exchanges will fill you at a better price.
Multi-Listed Stock Options
December 2, 2008