Proprietary Trading Bid-Ask Differentials

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Regulatory Circular RG13-018
Date: January 30, 2013
To: Trading Permit Holders
From:CBOE Help Desk
RE:Bid-Ask Differentials
This Regulatory Circular updates and replaces RG12-102
CBOE’s rules allow it to set the bid-ask differential requirements on a class by class basis. CBOE will
announce the bid-ask differentials via Regulatory Circular. Except as provided below, the current
differentials for all option classes are set forth on page 2 of this Regulatory Circular.
Requests for bid-ask relief on a class by class basis should be directed to the CBOE Help Desk.
Requests must include an explanation as to why bid-ask relief is needed. Please note that if a
particular option class was granted bid-ask relief through an expiration period and the relief is greater
than the below bid-ask differentials, the relief granted will continue through the expiration period.
Additionally, due to the volatility in the underlying stocks and other factors affecting both the options and
the underlying, CBOE by its authority under the provisions of Exchange Rule 8.7(b)(iv), has temporarily
established modified bid/ask differentials in the option series of the following option class(es).* This
relief is granted from the opening of business on January 31st through the February 2013 Expiration
Cycle unless withdrawn by the CBOE prior to that time.
Class
Relief For Near
Term Options
Relief for
LEAPS Options Name
1 KYAK 2.0* 2.0*
Kayak Software
Corporation
*Relief granted is 2x the current bid-ask differential requirement specified on page 2 for opening
rotation only. Open outcry and intraday electronic quoting widths apply unchanged.
CBOE granted this relief with the contingency that the disseminated markets in these classes will be
competitive and in many instances will be narrower than the relief granted below. CBOE will continue
to monitor the activity in the underlying securities of these options, and will modify the bid/ask
differentials in the respective options accordingly.
Regulatory Circular RG13-018
January 30, 2013
Page 2 of 2
1 2 3 4
All classes excluding LEAPS, NDX, RUT, SPX,
SPXPM*,
UltraShorts & UltraLongs
LEAPS,
NDX,
RUT,
SPX
and
SPXPM*
UltraShorts
and
UltraLongs
Short
Sale
Circuit
Breaker
in Effect
1
A
Opening
Rotation
& Open
Outcry
Quote
Widths
$0.50 if the bid is less than $2, 2x
Row A
Column
1
$10 wide,
unless the
bid is more
than $200,
in which
case the
bid-ask
differential
is $12 wide.
3x
Row A
Column
1, 2 or 3,
as
applicable
$0.80 where the bid is at least $2 but does not exceed
$5,
$1.00 where the bid is more than $5 but does not
exceed $10,
$2.00 where the bid is more than $10 but does not
exceed $20
$3.00 where the bid is more than $20 but does not
exceed $50,
$5.00 where the bid is more than $50 but does not
exceed $100,
$8.00 where the bid is more than $100 but does not
exceed $200, and
$12.00 where the bid is more than $200
B
Intraday
Electronic
Quoting
Widths
$5 where the bid does not exceed $100,
2x
Row B
Column
1
$10 wide,
unless the
bid is more
than $200,
in which
case the
bid-ask
differential
is $12 wide
3x
Row B
Column
1, 2 or 3,
as
applicable
$8.00 where the bid is more than $100 but does not
exceed $200, and
$12.00 where the bid is more than $200
The bid-ask differentials do not apply to at-the-money or in-the-money series where the quote width on
the primary market of the underlying security, or the quote width calculated by the Exchange or its
agent for various indices, is wider than the differentials set forth above. For these series, the bid-ask
differential may be as wide as the quote width on the primary market of the underlying security or
calculated by the Exchange or its agent, as applicable. “In-the-money series” are defined as follows:
for call options, all strike prices below the offeror last sale in the underlying security (whicheveris
higher); and for put options, all strike prices above the bid or last sale in the underlying security
(whichever is lower).
*SPXPM is planned to be effective February 19, 2013upon completion of move from C2 to CBOE.
Additional Information:
Please contact John Haffner at [email protected] Jim Corsey at [email protected] (800)
405-3277 or for additional information regarding bid-ask relief.
1
The bid-ask differentials may be 3x wider for the option class overlying an NMS stock while the underlying stock is subject to
a short sale circuit breaker under Rule 201 of Regulation SHO under the Exchange Act. The bid-ask differentials shall set forth
in Column 1, 2 or 3 above, as applicable, shall recommence once the short sale circuit breaker is no longer in effect for the
underlying NMS stock. For example, when a circuit breaker is triggered in the underlying stock XYZ, the $0.50 opening
rotation and open outcry quoting width requirement if the bid in an XYZ option series is less than $2 will change to $1.50, then
revert back to $0.50 once the circuit breaker is nolonger in effect.

Source: http://www.cboe.com/framed/PDFframed.aspx?content=/publish/RegCir/RG13-018.pdf&section=SEC_ABOUT_CBOE&title=CBOE%20-%20CBOE

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