With the dramatic increase in retail options trading, Interactive Brokers has launched a new order destination to help its retail and institutional clients achieve better price execution on their options trades.
Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers, said that clients of Interactive Brokers benefit from their continued focus on advanced technology that seeks to lower trading costs.
“As demand for options trading continues to grow, the IBUSOPT destination gives clients the opportunity to achieve better execution prices on US options trades, while also allowing orders not to be displayed on the exchange,” he told Traders Magazine.
IBUSOPT, an order destination for US equity and index options, is designed to offer clients the opportunity to interact with IBKR SmartRouted order flow and have their orders filled in between the National Best Bid/Offer (NBBO).
The IBUSOPT destination helps traders execute options trades more efficiently and effectively and helps achieve better executions by providing traders with more control over their trades by supporting different order types.
IBUSOPT orders will wait for an offsetting order from another IB customer and will not be shown to the market.
The IBUSOPT-Pegged-to-Midpoint order type allows clients to peg their order to the midpoint of the bid-ask spread, meaning that the order will be executed at the midpoint of the NBBO, (the highest bid and the lowest ask).
This order type helps traders get better prices by not having to pay the bid/ask spread.
The IBUSOPT-Pegged-to-Best order allows clients to peg their order and compete by one tick with the best bid or ask price available in the market.
Traders who use this order type want to ensure that their order is executed at the most favorable prices, regardless of the market conditions.
Sanders said that for their retail customers submitting marketable orders, it provides additional opportunities for price improvement, and for more of it.
“For our customers submitting orders for IBUSOPT, it gives them a way to attempt to buy between the bid and the midpoint, or sell between the offer and the midpoint, without leaking information about their trading interest or subjecting themselves to the adverse selection of being traded against by market-moving orders if they instead displayed their order on an exchange,” he said.
Sanders added that the new IBUSOPT order destination was developed using the same “powerful and proprietary technology that Interactive Brokers has offered clients for decades”.
IBUSOPT is available to all Interactive Brokers clients, including individual investors, advanced traders, Financial Advisors, Hedge Funds, and other institutional clients.
The destination is available on the advanced Trader Workstation trading platform, offering a seamless and efficient trading experience.
“We believe that this new order destination will help our clients achieve better execution prices on their US options trades,” said Thomas Peterffy, Founder and Chairman of Interactive Brokers.
He said that it will be a valuable tool for both retail traders and institutional investors.
“We are looking to expand this order type to encompass regions of strike prices with a one cancels all feature, in the near future,” he said.
