Regarding the "options people not being as technically sophisticated" One of the stories from the former PHLX Options Exchange, now part of the Nasdaq umbrella is that their rapidfire price protection feature was one of the killer features that was a competitive advantage over the other options exchanges back in the day. Now a days, all the major options exchanges have this feature.
A market maker required to quote in say 80% (by self-governance rules) of options in a given underlying has a lot of quotes to update when the market moves. AAPL has 1000+ options, so a market maker may be obligated to quote at least 800 options books.
When the market moved, there would be 800 options to update. With order/ack latency around ~30-50u today, but around 400u-1ms 10 years ago, it could take almost half a second to 1 second to get those quotes updated. In that eternity, a fast trader could swoop in and execute against the old quotes to their advantage.
Rapidfire implemnted an atomic cancellation of orders if too many options executed on a single side only such as only the bids getting executed. This significantly minimized the risk of getting eaten alive on say a couple hundred contracts every single time the market moved.
A market maker required to quote in say 80% (by self-governance rules) of options in a given underlying has a lot of quotes to update when the market moves. AAPL has 1000+ options, so a market maker may be obligated to quote at least 800 options books.
When the market moved, there would be 800 options to update. With order/ack latency around ~30-50u today, but around 400u-1ms 10 years ago, it could take almost half a second to 1 second to get those quotes updated. In that eternity, a fast trader could swoop in and execute against the old quotes to their advantage.
Rapidfire implemnted an atomic cancellation of orders if too many options executed on a single side only such as only the bids getting executed. This significantly minimized the risk of getting eaten alive on say a couple hundred contracts every single time the market moved.