A new way to Short on a Downtick ?
- Thread starter WinSum
- Start date
SLIPS (Short term Liquidity Providers)
The Slips product has been out since jan 1 through Hold Bros. They have been actively used to sell stocks on a downtick since then. They are very expensive. A round turn costs .046. That is right, almost $50 per trade. It is crazy, but works at times.
Here is how a slip works.
Max slip is 1000 shares per 30 sec.
the bid has to be NX able (auto execute)
You the trader enter the order to execute a slip. the offering BD of the slip has a program that looks at the market of the stock and determines the following
The bid size must me more than 1.
A slip can only execute within 5 cents of the previous NY print.
Bid must be NX able.
SLIP executes for only how much is on the bid (ie.. you want 1000 shares, and only 400 show, order goes out for 400)
If all the above is met, The BD offering the slip will create an uptick on an off exchange, and your order will execute against that uptick. The offering BD will then be long the stock, and ATTEMPT to NX the current bid. This is where their risk comes in. Since they are long, if the bid fills before the slips BD can execute, then they offer the stock down 30 or 40 cents, and just dump it. The biggest problem is that the firm offering the SLIP passes all the "extra" costs on to the trader. If they take a lose of 20 cents then they will charge you a "surcharge" at the end of the day.
Now understand all the above takes place in a fraction of a second.
VERY EXPENSIVE, and only useful in certain circumstances.
Make what you will of it.
Bandit
The Slips product has been out since jan 1 through Hold Bros. They have been actively used to sell stocks on a downtick since then. They are very expensive. A round turn costs .046. That is right, almost $50 per trade. It is crazy, but works at times.
Here is how a slip works.
Max slip is 1000 shares per 30 sec.
the bid has to be NX able (auto execute)
You the trader enter the order to execute a slip. the offering BD of the slip has a program that looks at the market of the stock and determines the following
The bid size must me more than 1.
A slip can only execute within 5 cents of the previous NY print.
Bid must be NX able.
SLIP executes for only how much is on the bid (ie.. you want 1000 shares, and only 400 show, order goes out for 400)
If all the above is met, The BD offering the slip will create an uptick on an off exchange, and your order will execute against that uptick. The offering BD will then be long the stock, and ATTEMPT to NX the current bid. This is where their risk comes in. Since they are long, if the bid fills before the slips BD can execute, then they offer the stock down 30 or 40 cents, and just dump it. The biggest problem is that the firm offering the SLIP passes all the "extra" costs on to the trader. If they take a lose of 20 cents then they will charge you a "surcharge" at the end of the day.
Now understand all the above takes place in a fraction of a second.
VERY EXPENSIVE, and only useful in certain circumstances.
Make what you will of it.
Bandit
Cuz,
Mind explaining the "technicals" of a conversion?
Thanks!
Mind explaining the "technicals" of a conversion?
Thanks!
SLIPS have a very very low fill rate. Specialists are catching on and not letting Bids be Nx able. Conversions is the way to go.
You are long the stock say 500shares, ( you can only short /sell that amount)and have a marriage in options as well. Than as to not screw with your daily p/l you back out of the position every morning premarket(i.e. sell the 500s) and that should zero out your account or else you will have the appearance of being long 500shares.
But essentially you are. So therefore you can hit a bid whenever you want for that share amount. The conversion will expire over time and it is cheaper to carry the over a longer time.
That is how it worked at a firm I used to work at. If there are other variations..........I don't know.
But your BD should be able to help you with that.
They are worth it if you trade the same stock regularly,if not than it doesn't pay.
I have a few puppies in my universe but I don't have any conversions as of now.
Good Luck and hoped that helpedl
