> how options trade; with periodic auctions

Former options trader. This improves dealers’ profits.

Consider a once-a-day auction. The person who puts in an order at 9:35AM incorporates five minutes’ information. The person who does so at 3:55PM, all but five minutes’. Anything material that happened at Noon is extracted from the early order and benefited to the late one. If the orders are unsealed, the later order can incorporate the early order’s existence.

With options, that means the high-speed late order has better information about the underlying stock than the orders preceding it. So it generates risk-free profits from them.