The options market has lagged the equities market in several ways by about five years when it comes to decimalization and off-exchange execution venues and the like. Decimalization in some ways gave rise to ultra-narrow spreads, which in turn gave rise to algorithms that could empower much smarter trading, slicing and dicing orders to take better advantage of price discrepancies.

While more brokerages are embracing algorithms for options, the options industry as a group still lags the cash equities business by at least five years, notes Traders. There are a lot of reasons to think that this lag will not be closed anytime soon. One key obstacle to greater institutional acceptance of algorithmic trading is the general lack of depth-of-book data. You really need better indications of hidden and displayed options liquidity. Only then will brokers be able "to build algos to access that liquidity."

"And once the algos come on line, you have the ability to measure. And once you have the measurements, people can start making slippage predictions. You generally get a lot more confidence about your ability to fill a large block order." 

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