Robert Morse
Sponsor
I'm not sure how we ended up arguing about scale, but it is an interesting business decision. The old joke (Not funny one) was, a friend walks up to you and say he has an investment where you can get three times your investment in a year. You say I'm in, and he then asks for $1. Of course no one really cares about giving someone $1 to get $3 back in a year if that is all you can invest. I did a case study on a company in Grad school. I do not remember which conglomerate it was, but they would entertain any business pitch from any employee where they could invest a minimum of $1mm and get a 17% return. They are happy to have hundreds of products as long as get receive no less than 17% on their investment.
We all have to make the same choices when we trade. Before 2010, when I was trading full time, I set up a pairs trade to buy CBS.A and Short CBS.B. The "A" does not trade often, but I was able to buy it for a discount to the "B" . On average about $0.04. So how much time would I bill willing to put in if on an average day I might not buy 100 shares? Because it was automated, I set that up every day. If it were manual, I would have passed. I assume big firms did not care because of the low value. Over the course of 9 months, I did about 200,000 shares long/short. when I could not sell it out for $0.04 credit, I converted A to B. Most of that volume was over one month.
Bob
We all have to make the same choices when we trade. Before 2010, when I was trading full time, I set up a pairs trade to buy CBS.A and Short CBS.B. The "A" does not trade often, but I was able to buy it for a discount to the "B" . On average about $0.04. So how much time would I bill willing to put in if on an average day I might not buy 100 shares? Because it was automated, I set that up every day. If it were manual, I would have passed. I assume big firms did not care because of the low value. Over the course of 9 months, I did about 200,000 shares long/short. when I could not sell it out for $0.04 credit, I converted A to B. Most of that volume was over one month.
Bob
