Options Trading Strategy Iceberg
Iceberg is the most aggressive options trading algo that SMF Options Traders use Iceberg offers flexibility to display 1 contract while the order size is 50 or 100.
This is our stealthy way of getting entries without showing our hands to the options market makers and other options exchanges.
Trading Objective
Iceberg Options Routing is for a trader only wants to display a portion of the full order.
Options Trading Objective - Iceberg
Iceberg Options Trading is an SMF favorite route because the router will sweep all available liquidity up to the entire amount of the order.
Iceberg Features
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► The strategy will synthesize a reserve order type acrossall exchanges
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► If the size is available, the smart sweeping logic could finishthe order quickly
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► Trader designates how much of the order should be displayedwhen posting to the market
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► If the order becomes non-marketable, then the displayquantity will re-post
Trading Example
Buy 200 ABC Mar 50 Calls $1.25, display quantity 25
|
Exchange |
SIZE |
Bid |
Ask |
SIZE |
Exchange |
|
C2 |
40 |
$1.00 |
$1.10 |
40 |
C2 |
|
PHLX |
25 |
$1.00 |
$1.15 |
50 |
PHLX |
|
CBOE |
100 |
$.95 |
$1.10 |
100 |
CBOE |
|
BOX |
50 |
$1.00 |
$1.15 |
25 |
BOX |
|
ARCA |
100 |
$1.00 |
$1.10 |
100 |
ARCA |
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► Total NBO of 240 contracts at $1.10
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► Exchange displayed in order of preference
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► Send the display quantity of 25 contracts utilizing smart posting logic. In this example C2 would post a $1.05 bid for 25 contracts
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► The balance of the order will stay within Iceberg router
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► If the order becomes marketable at $1.05, send sweeping slices to capture the greatest amount of liquidity