Block Trades

M

mjt

I wanted to start a new thread here so as not to get off topic on the 'Great New Pattern' thread.

I'm really intrigued about a post from Praetorian about a block trade that occurred after hours on 6/4. It was NIKU 3.6 million shares at .97. I couldn't find it on time & sales. I can't find trades below 1.07 in the last couple days. And it traded up from that level after hours on 6/4.

Am I missing something here? Did someone actually sell over 3 million shares 10 cents below market value? This makes no sense. If so, does this go on regularly? If you bought at .97, you could have immediately sold it on ISLD for 10 cents higher.

Someone please clear this up for me. I would like to know if there are opportunities to make a riskless 10% return after hours.
 
Big deals get done away from the market all the time because large transactions require liquidity, which is often found only outside the best quoted prices.

 
Originally posted by mjt
Am I missing something here? Did someone actually sell over 3 million shares 10 cents below market value? This makes no sense. If so, does this go on regularly? If you bought at .97, you could have immediately sold it on ISLD for 10 cents higher.
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Besides what Baron said, it is also important to note that the trade happened on the Nasdaq. In this situation there is no way to get a piece of that trade because it happens behind the scenes.

On the other hand, when there are block trades on the nyse it is easier to get a piece of the action. For example if a stock is trading at 51.50 and you think the specialist is going to drop it to 51 to do the block, then you can put in a limit buy order at 51.01 and he will have to fill you when he passes the block. Then, usually you can turn around an sell it .2-.5 higher. The tough part is forecasting where and when the blocks happen.
 
mjt,
I don't know about after hours because I don't trade then, but every so often you can take advantage of the types of trades you are describing, but they end real fast. I used to scalp MSFT primarily, and every so often you would see the prints going off higher or lower than the market. I would simply put all my ECn orders near the prints and see if I would get lucky. Inca was usually the filler, and then you would just throw it to the market price for near risk free trades. I havn't seen it happen much since decimals, but we used to get free 1/8s to 1/4s on as many shares as we could get. This would happen maybe 1 out of 25 times that I saw wacky prints, or 1-2 times a month, but I tried every time and it would pay off when the block was going off. Only once did this pay off on an ECn other than Inca, and that was with BTRD on the FED cut day in Jan. All afternoon we were bidding Btrd 1/16 to 1/4 below the market, getting hit and offering out on isld. Those were the days, I personally miss fractions.

Sorry for rambling, but to sum it up. Watch the prints for wacky ones, throw out your ecns there, and hope you get hit. I have done it, and so has everyone else in our office. 7 of us were doing it to INTC this morning on one down rip, sending out all 6 ecns, selectnets to all bids, and soes, getting stock and bidding it out on INCA 15 cents lower. Later, Speed
 
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