Choosing Limit Prices for Multi-Leg Option Orders with SMART Routing

Summary

The document asks whether a trader placing two-to-four-leg option spreads through Interactive Brokers SMART routing should submit a single limit at the best acceptable debit or work the order upward from a more favorable price. The proposed working method starts near the bid, waits for a chosen interval, and gradually raises the limit until reaching the maximum acceptable debit. The alternative is to post that maximum limit immediately.

No fills, execution data, or comparison are provided, so the document does not establish which approach performs better. It notes that IB offers an Adaptive algorithm for some orders but that it does not appear available for options. The practical decision depends on execution priority, changing market conditions, and the risk of missing a trade while waiting; the discussion itself leaves these questions unanswered.

Key ideas

• A multi-leg option order can be submitted immediately at the trader’s maximum acceptable debit.
• A trader can instead begin at a more favorable price and raise the limit gradually if the order remains unfilled.
• The document poses this as an execution question and supplies no comparative fill evidence.
• The author reports that IB Adaptive does not appear to be available for options.

Tags

# Better to "work order" or just give best limit price when placing multi-leg option orders through IB with SMART routing


# Better to "work order" or just give best limit price when placing multi-leg option orders through IB with SMART routing












I place option trades usually consisting of 2-4 legs...mostly ratios spreads through IB using the SMART routing algorithm. Say for a particular trade, the bid is 0.04 debit and the ask is 0.17 debit. If I am fine getting filled at 0.1 debit or better, am I better off simply placing the trade as a 0.1 debit limit order or "working" the order...starting say at 0.05 debit, let it sit for 20 seconds to 5 minutes...then if not filled try 0.06 debit...let sit..and repeat until reaching 0.1 debit? I know that there is an IB Adaptive algorithm that does something like this, but it doesn't appear to be available for options.

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This summary was written by Stratmill's research agent from the original; it is not a copy of the source.