Services provided by MJT Quote Engine include:

• NYSE/ARCA, NYSE/ AMEX, and CBOE options market maker quoting
• Automated order sending (electronic eye)
• Trading / analytics software
• Position analysis
• Risk analysis
• Complex Order Instrument Entry and Management
• Ability to quote all Equities, ETFs and Indexes, and some Futures.
• Real-time options trade analysis for each trade.
• Real time portfolio analysis by underlying and/or by portfolio.
• Ability to automatically send electronic orders based on user supplied criteria (both options and stock).
• Quicker updates to quote and order prices giving traders a competitive pricing edge.
• Risk mitigation features for quoting and automated Order Management safety features.
• Ability to electronically send options quotes at a very low cost.
• Real-time Mark to Mark Profit and Loss
• Real-time Theoretical Profit and Loss.
• Simple Solution to Market Making Regulatory Obligations.
• Ability to Import and Export volatility information to and from other 3rd party applications.
• Choice between incoming data vendors.  MJT supports both ACTIV Financial and NYSE Technologies (Superfeed).

Unique MJT Functionality

• MJT Quoting Engine contains some extremely unique functionality. Because of this, we are differentiated from current competition.
• Very innovative trading displays
• Maintenance Quotes (for satisfying regulatory obligations)
• Unique Trading Parameters Set up Page
• Strategy trading (proprietary complex orders legging mechanism.

User Setup – User Profile – Preferences

The upsurge in electronic trading has forced sole proprietor traders and floor

traders to acclimate to an environment in which technology costs are high and application and network setup is complex, requiring the input of multiple technicians. User setup of the MJT application is easy and streamlined. Parameter maintenance is uncomplicated. The system includes a systems information monitor to check for lost connections. Many other safety measures such as heartbeat and severed-connection monitors remove the trader from the market until all dependencies are restored.

Market Screen Coloring - Better, Lock and Cross Coloring

Before submitting quotes, users can clearly and easily see if their quotes are in line with the NBBO by viewing the market screen.

• If quotes are better on one side or both sides (bid and offer) of the NBBO in any series, the background of that series is highlighted in a cautionary yellow.
• If theoretical values are locked/crossed with the NBBO, that value is highlighted.
  
• Green indicates the user is a buying opportunity below the current theoretical value.
  
• Red indicates there is a selling opportunity above current theoretical value.
• Intuitive coloring is quick to learn, logical to traders and contrasts well to alert users to important events that occur in the trading session.
• Users can control more issues (stocks) using automated alerts that are clearly displayed in the system.

Base Quote Prices Established from Underlying Prices

Typically, most systems use the mid-point of the primary market for the underlying to calculate base quote prices. However, MJT has refined this logic as follows:

• Stock bid prices are used for call bids and put offers.
• Stock ask prices are used for put bids and call asks.

The system prices calls and puts to the actual hedge value instead of the mid-point. The result is theoretical calculations are more accurate by capturing a true "edge to hedge" theoretical value.

Changing/Adjusting volatilities to changing market conditions

The user can change volatilities for the entire curve by clicking on either the 1 point or .1 point spinner.  As an example, if the 1 pt. spinner is clicked up twice, the entire volatility curve for that month will be adjusted up by 2 (two) points.  This allows a user to rapidly change volatilities by term to rapidly changing market conditions

Quoting Profiles

Different market conditions require different quoting styles to maximize profitability. The system offers a choice of four quoting profiles for quoting:

• Opening
• Standard
• Aggressive
• Passive

Changing quoting profiles is a one-click operation either by month or by series.  The user simply chooses a different profile in the “QuoteProfile” dropdown.

Copying Quoting Profiles to other profile

The copy functionality allows a user to quickly change edge/size parameters to adjust to any other profile that may have already been created. 

Each table lets users apply required discount to theoretical value for all buy prices and a premium over theoretical value for all offers. Once the amount of each quote’s required edge is established, traders can declare the amount of size they want their edge-based quote to reflect in the market. Users can configure the following inputs in order to create a quoting profile:

• Buy Call Spread Edge
• Buy Call Size
• Sell Call Spread Edge
• Sell Call Size
• Buy Put Spread Edge
• Buy Put Size
• Sell Put Spread Edge
• Sell Put Size

Utilizing tables is more intuitive than scripting, which is the current method used by the competition. Since most traders do not know how to write scripts, MJT’s method is more desirable and manageable – easy to expedite in rapidly changing market conditions.

Premium vs. Delta Based Edge Parameters

Edge parameters are configurable in two ways:

• Premium based - users define premium ranges that correspond to specific edge parameters.
• Delta based - users define delta ranges that correspond to specific edge parameters. Delta-based edge parameters allow traders to compensate for price changes as the options premium diminishes closer to expiration.

Recalculation Frequency of Base Quotes – (quote throttling)

Recalculation is based on either:

• x move (in cents) in the underlying, or
• y amount of time elapsed.

If the x or y parameter is met, recalculation occurs immediately.

For example, re-quote occurs if the stock moves $0.02 or if 15 seconds elapse.

Control over recalculation frequencies makes the MJT system faster than others in submitting quotes and evaluating theoretical pricing and position Greeks without over-quoting and wasting CPU resources.  This feature can also be used to mitigate the quote rate the user will send to the exchange.

Granular and Dynamic Time to expiration evaluation for calculating theoretical prices

Each time the system recalculates a base quote, we use the exact time remaining to expiration to avoid anomalies that result from calculating options with very short life spans.

OK to Improve NBBO

This feature lets users control (with one click) if their pricing can improve the NBBO.

• If enabled, the system can submit quotes that are better than the NBBO, as long as edge parameters are met.
• If disabled, the system can not better the NBBO, regardless of the prices created by the system. The prices submitted to the market are equal to the NBBO or worse.

Join NBBO if “x” size is available

This feature allows a user to configure the system so he/she will only join the NBBO when a certain size is available.

Auto-Hedge

The system can be set up so that system generated option trades are auto-hedged immediately by placing stock orders at the calculated buy/sell, price and exact delta. The user can choose to auto-hedge based on type of trading interest or choose to have all trades hedged automatically.  The user can also choose different styles of auto-hedge based on the quality of option execution.

Hedging risk is automatically and immediately eliminated by the system.

Users do not have to concentrate on equity hedges associated with option trades, providing more time to focus on trading strategies and position risk analysis. Also, the exact amount of deltas required to hedge the trade properly are sent. This occurs more quickly than other order management systems (OMS’s) in the industry.

Auto-hedge allows momentary moves in stock or options to be simultaneously captured where if you were to manually attempt this, you would miss most opportunities.

Exchange Order Routing

The MJT QE has a primary market for the underlying (NYSE or NASDAQ) and a secondary market, defined by users (currently ARCA).

Enable/Disable on Global, Underlying, and Series levels

• User has multiple ways to control quoting.  User can activate on a global, underlying, or series level.
• Users can activate quoting per series by simply checking a box to enable or disable the specific series.
• Users can activate quoting for an entire underlying issue by simply double clicking on that underlying within the position greeks page.
• Users can activate the global control by double clicking on Global Enable/Disable button on the position greeks page.
• Yesterday’s Volatility
• Users can see yesterday’s volatilities on the market screen so he/she can see the net difference in volatility between yesterday’s trading and current trading.
• Allows users to do a P&L analysis and a theoretical change analysis.
• Allows users to quote prior to the open not relying on implied volatilities to drive pricing.

Safety Features for Quoting

Auto-Fade

While users may want to actively quote, they may not want  numerous simultaneous or nearly simultaneous consecutive executions within the same series. Auto-fade functionality allows users to digest trades without the further risk of executing at the same price within the same series minus the time to digest the risk associated with the trade or to hedge the trade. Users can enable/disable auto-fade.

Auto-fade has two user-configurable parameters:

• x amount fade choices: 1x (actual fade amount), 2x (double the fade amount) and an amount in dollars to fade, supplied by users.
• y amount of time duration of the fade.

Minimum and Maximum Volatility

• Within the system, there is a minimum and maximum threshold that acts as a “collar” for volatility inputs. This collar provides protection to users by limiting the lower/upper boundary of the run volatility value. If the run volatility is accidentally or inadvertently is run too low or too high, users could potentially sell/buy too much or too quickly, creating many undesired trades. In this case, users could have a significant loss.
• User-created values establish the collar.
• If users do not input any values, the system uses default values of 0 for minimum and 800 for maximum.

Minimum Sell Price

• In some cases, the volatility value for out-of-the­-money strikes creates a price too low to justify the risk. The minimum sell price buffers this potential situation.
• If users input a value for the minimum sell price, this value overrides any base quote offer less than this value.
• This functionality operates on the month level. It is not configurable on the series level.

Maximum Buy Size

• This value is a cap for the buy size of the base quote generated by the system.
• The maximum buy size overrides any size generated by the system that is greater than this value.
• Operates on the month level.
• Applies to both calls and puts.

Maximum Sell Size

• This value is a cap for the sell size of the base quote generated by the system.
• The maximum sell size overrides any size generated by the system that is greater than this value.
• Operates on the month level.
• Applies to both calls and puts.

MJT Risk Limitation Mechanism

Allows users to set parameters that, when met, disable users from trading.

Operates on two variables: x trades, over y seconds.

External Exchange Risk Parameters - OX Risk Limitation

The system accommodates exchange-level, risk-limitation mechanisms. Users can manage this external functionality through the MJT system.

Underlying Quote Quality for Base Quote Pricing

• Maximum inversion
• Maximum move from previous price
• Maximum width

Trading Analyses / Trade List

Real Time Individual Trade Analysis

The system performs trade analysis for each trade, based on data shown to users within the trade list. Trader’s confidence is boosted by knowledge of all pertinent real-time data in easily understood and flexible format. It allows a trader to visually confirm many trades as profitable in an instant.

Listed below are some of the unique data that the MJT application offers:

• Theoretical price at time of trade (time received)
• Theoretical edge of trade:
• Amount of edge captured at receipt of trade. (Edge is the difference between theoretical value and trade price.)
• P&L edge.
• Trade theoretical P&L (dollar-amount display of net profit or loss on each trade)
• Delta plus or minus (net long/short deltas obtained by each trade)
• Suggested stock hedge (amount of shares and price of the auto-hedge order that is sent)
• Recent base quotes – provides last 20 base quote prices generated including the underlying prices.  This is especially useful for audit trail purposes and trade disputes.
• Totals of trade list are displayed at the bottom of the list.

Position Update - “Done Away” Order Entry

For non-electronic trades done at away exchanges, users need to manually update the position. Done Away Order Entry provides this ability.

OMS (Order Management System)

The MJT application has an order management system that displays all existing orders, including stocks and options, and their current status.

Displays typical information of an OMS: side, volume, series information, price, time of execution, etc.

• Styles of auto-hedge available for the trader include:
• Normal Style (system will enter a limit order at the current market prices)
• Do not auto-hedge.  In this case, the user chooses to manually hedge the trade.
• AH at break even. The system will enter a limit order at a price to hedge the stock which will result in a break even on the option trade.
• AH at required edge. The system will enter a limit order at a price which will regain the edge requirements entered by the user.
• Market order ignore edge.  In this case, the user wants to immediately eliminate any legging risk possible and is satisfied with locking in whatever edge was received by option trade.
• Double hedge - this particular hedging style was desired by a few MJT users and was built for a very specific scenario.  This feature is generally not used by most MJT traders.
• 1 cent better 
• Middle Point

• All critical position updates are real time and put into a single view for the trader.
• Access to information related to haircut requirements, P&L information (theoretical and mark to mark), risk information, and all greeks is provided in this screen.