What if someone sells 10 000 NQ contracts with an iceberg order....

October 16th, 2020, 07:20 AM

brakkar

Let's take the hypothetical (or not so hypothetical) scenario that a large trader has 10 000 contracts of Nasdaq Emini NQ to sell.

He puts an iceberg order at a level, let's say 11 000. The order is reloaded endlessly until the 10000 contracts are sold.
This of course, will stop the price from going up.

But what will happen? Since the future is correlated to the real index, and if the stocks composing the index decide to move up.... then what will happen?
Will there be a divergence between the index (going up) and the future staying stuck?

I know such a trader will not just sit on such a large order... it's a hypothetical scenario to better understand the mechanics of all of this.

I have seen that these type of orders can work depending on how your front-end sends this Out. if you are doing 100 x 100 Lot orders The price can Tick Higher during the time the next 100 sell at 11000 gets processed and before the next 100 gets sent in. I have also see that if the market does get paid at 11000.25 then goes Bid there the rest of whatever is left of the 10K sell is halted from entering the exchange due to the order violating the rules of offers lower than the best bid on Limit. I would expect that the order would then need to be resent at a price of 11000.25 or Higher.

What if someone sells 10 000 NQ contracts with an iceberg order....

Discussion in Emini and Emicro Index

What if someone sells 10 000 NQ contracts with an iceberg order....