Options orders aren't hidden, but bid/ask quotes are there only because market makers need to post them, and they do try to get the best price for themselves while not getting screwed in case of news/events.
But they continually watch the incoming orders and compete for them. When you submit an order, there is a quick 100-millisecond auction between MMs and if your price is good enough then one of them wins, and may even give you better price than you asked. Otherwise your order becomes the best bid or ask/offer and even skews the mid. At that moment the previous "mid" doesn't matter because your order affects it and you've created a new "mid". At some point someone may simply match your price, or a market maker may fill it when they find another order or a hedge that still makes them a few bucks. Basically your order needs to be useful to someone else to get filled, and this has nothing to do with recent bid & ask. Most orders do get filled near the mid, the only question is how far from the mid.
Thursday, February 23. 2023
Mechanics of Option Trading at the MidPoint
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