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On modified / nullified trades

Options Flow

You may have come across a transaction or two in your flow feed that is completely struck out:

 

Trades that have been struck out have been nullified (cancelled) or modified. Nullifications/modifications are a normal occurrence. 

“Currently, pursuant to Commentary .02 of Rule 6.77, the Exchange allows for parties to agree to nullify an execution. Commentary .02 of Rule 6.77 also states that once both parties agree to the trade nullification, one party must “promptly notify the Exchange for dissemination of cancellation information to the Options Price Reporting Authority.” In addition, the Exchange currently allows for a mutual price adjustment for trades that meet the obvious error (or catastrophic error) requirements pursuant to Exchange Rule 6.87 if those mutual agreements are done within specific timeframes.”

Unfortunately it is not specified if the trade in question has been outright nullified or if a modification has been made.

In this specific example we see, shortly after the nullification/modification, another trade on the same contract. 

 

We can reason that in this case the trade was modified rather than nullified, given that we are seeing a similarly looking transaction on the tape. 

As a reminder: as previously stated nothing explicitly states whether a trade has been outright nullified or if a modification has been made. If some flow you're tracking receives a red strike out make sure to pour over the flow feed to try and identify a modification. If no modification is visible then it's likely the trade was nullified.