Ever since GMREEEE this sub has been filled with people from r/all calling for the end of payment for order flow for a variety of reasons. Now the front page has a news article talking about how the SEC chair is thinking about ending payment for order flow. I just wanted to say that if you’re against payment for order flow there’s probably a 95 percent chance that you don’t know what a call condor spread is. PFOF gives you no or reduced commissions and also makes the options market more liquid. Here are some arguments against PFOF that I’ve seen on this sub:
1. HedGe FuNd GiVe BAd FiL.
In reality you can set the price for what you want your options to be filled at. This can be done by making a FUCKING LIMIT ORDER. There is probably not a single professional option trader that buys or sells options with a market order. Options are, by their nature, illiquid on a majority of underlyings given that you have thousands of combinations of strikes and dates to choose from. Again, especially if you trade spreads, you should be placing limit orders for your positions. Also, if you remove PFOF this liquidity issue will only get worse. This is just the reality of gutting several billion dollar firms that write and buy options. Less money in the options market means less liquidity.
2. HooDgE FunD ManiPuLaeT MarkET wItH my OrDeR InForMatIoN
I can right now go on my think or swim platform and scan for options orders under 10k (or however large you want) and look at the bid/ask spread to tell if this trader bought or sold these options. If I really wanted to I could go into the API and make a robot that does this for me and organizes all this information into some sort of bullshit spreadsheet. Small orders like these (the kind retail makes) provide a reasonable guess as to where retail is positioned. I’m just some jack off wsb troll with a think or swim account and I have already laid how how to detect retail positions. If I can do it then the big dogs certainly can do the same even without payment for order flow.
One more thing: If you lose money on your 10 delta put it’s because it was a bad trade, not because some Algo picked out your 5 lot position and spent millions of dollars manipulating the market to shake you out of your 200 dollar position.