Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Minyan Mailbag - Prints

By

PrintPRINT

Note: Our goal in Minyanville is to remove intimidation from the financial markets and encourage an interactive dialogue among the Minyanship. We share this next discussion with that very intent.

John,

Sometimes in the pre or post-markets there are some prints that are way above or below the previous day's closing price but one cannot get off any trades at these prices. Are specialists or market makers playing poker & trying to bluff & fool traders?

And in the same vein, often a stock will open up or down a fair amount and then reverse course for the entire day. Are 'they' trying to throw out some bait and lure 'us' into biting on a false move? And if so, is there any way to tell a real break from a fakeout?

Thanks,
Minyan Bruce

Bruce,

The first situation is actual prints where someone makes a mistake. Most traders use electronic systems, and even though there are fail-safes imbedded in these systems during the day to prevent a trader from entering an erroneous price, when trading extended hours those fail-safes come off. It also can (foolishly) be some retail customers entering market orders before the opening. We have taken the other side of these trades sometimes because in trading gamma we enter prices to sell above the market and prices to buy below the market pre-opening for a part of our position.

The second situation is the result of how a specialist prices pre-opening supply and demand. When there is an order imbalance we often see specialists price the opening at a price where they know they can make money, perhaps too much. If they can get away with it, they not only take all risk out of the trade for themselves, but price the opening print where it becomes a big payoff.

Regards,
Prof. Succo

No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE