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February 16, 2009

Knight Simplifies Options Orders

By James Ramage

Knight Capital Group wants to make complex options orders a little easier to execute.

The broker designed a feature for its execution management system--Knight Direct EMS--for this purpose. Its new complex order capabilities let buyside and sellside traders manage complicated options orders that involve multiple series, strikes and asset classes, said Bill Cronin, head of Knight's electronic product sales, including Knight Direct EMS.

The complex options technology includes smart-order routing capabilities that allow traders to build multi-leg orders from options contracts listed on all seven domestic exchanges. Users can employ either industry standard strategies or build their own. The custom strategy can handle up to four equity-option leg orders.

Traders start with a new "complex options" window on their EMS, Cronin said. That window contains a drop-down dialogue box that offers about 25 of the most commonly used strategies, including spreads, straddles and butterflies.

"You would then be able to drop and drag particular series and strikes from your Knight Direct option series monitor into that window to create your complex order," Cronin said. "So you could, for example, buy 10,000 INTC and sell 100 of the near-month, at-the-money calls against it, or do spreads, straddles, condors, times spreads and more."

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