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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!

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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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  • $\begingroup$ Sorry. Do you think if they had put a market order that I would have been filled? I was the first the only person selling at 90 cents! If they had put a "market" order, I would have had first priority to be filled as I was the best offer. Because it was a limit order, I am guessing then the algos got to see the bid come up, get displayed, and within a nansecond decided to jump me. Am I understanding you correctly? Thank you by the way for the help. $\endgroup$ – jessica Dec 5 '14 at 17:59

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