Why a Better Option Ask May Not Fill at a Lower Trade Price

Summary

A trader describes posting the best displayed ask for a deep out-of-the-money put on an illiquid stock, then seeing a trade print at a lower price without receiving a fill. The response offers a basic limit-order explanation: if the buyer entered a limit bid below the posted ask, the exchange would not match the two orders. A subsequent execution at the lower price could therefore reflect a newly repriced offer that crossed the incoming bid, rather than a buyer taking the trader's higher ask.

The exchange matching rule helps explain why a displayed offer is not automatically filled by every trade in the same option. However, the short answer does not establish the exact order sequence, venue, routing behavior, or whether any conduct was improper. Resolving a particular incident would require order and trade timestamps, venue details, and market data beyond the anecdote. It also does not give a comprehensive account of options priority or intermarket routing.

Key ideas

• A limit bid below an ask does not cross that ask and cannot execute against it.
• A trade at a lower price does not by itself show that a resting higher ask was bypassed.
• Order sequence, exchange venue, and routing details are needed to assess a specific fill dispute.

Tags

# Why didn't my order get filled?


# Why didn't my order get filled?












So I placed an offer to sell a few liquid options on an already illiquid stock the other day.

I put an offer to sell a deep OTM put, the market makers who had their offers in place had, lets say $1, I came in and offered it at 90 cents. I was the best offer in the market and in the level 2's, I was the only size on that offer.

A few minutes later as I was watching the screen, I trade flashed across on the options I put an offer to sell. Except the trade price was 50 cents. I was watching the level 2's as the trade came in. Some of the market makers that were selling 1 dollar, brought their offer down to hit the persons order in nanoseconds. I didn't get filled! The market makers did! Their offer was clearly noncompetitive and they front runned my offer.

Isn't that illegal? Could it be because the bid order that came in to buy was a limit order vs market order? Or because they had chose the BEST exchange vs the specific exchange were I was offering my option. I want to know why I got front runned!

## Answer by mmodahl (score 1)

https://quant.stackexchange.com/a/15762

The 50 cent bid was certainly a LMT order and the exchange will not match a 50 cent bid with a 90 cent offer.

And the past tense of "front run" is "frant ran".

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