Don's Openings, Part 6 2003

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It appears that we lost some posts to the journal...I will recap again...

1/14 = +360 (18 cents)
1/15 = + 750 (37 cents)
1/16 = + 270 (13 cents)
1/17 ND
1/21 = (300) (- 15 cents)
1/22 = + 220 (11 cents)
1/23 = + 300 (15 cents).

OK, that should bring this up to date.

Don
 
Quote from GATrader:

Don, how feasible is it to do OO's on ETFs listed at the NYSE? Might make for less gap against/for you but more manageable ?
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Since the funds are so closely tracked to the indexes, there is little room for a Specialist to "gap up" or "gap down" very much....which eliminates much of the edge involved.

Don
 
Don,

Forgive me if this was covered in a previous post.... There are a couple of news scenarios for I would like your input... If a stock which you play regularly has announced earnings since the last trading session will you play it on the opening? If so, do you adjust the envelope for this symbol? What about earnings "guidance" and other significant news. Also, in the case where there is no news on the symbol you play but there is significant news or earnings on a stock in the same industry group? (or news on the industry group as a whole)

I understand that news is subjective and varies on a case by case basis, however, are there any rules of thumb which you follow? Thanks in advance.
 
Quote from KnowFear:

Don,

Forgive me if this was covered in a previous post.... There are a couple of news scenarios for I would like your input... If a stock which you play regularly has announced earnings since the last trading session will you play it on the opening? If so, do you adjust the envelope for this symbol? What about earnings "guidance" and other significant news. Also, in the case where there is no news on the symbol you play but there is significant news or earnings on a stock in the same industry group? (or news on the industry group as a whole)

I understand that news is subjective and varies on a case by case basis, however, are there any rules of thumb which you follow? Thanks in advance.
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Good questions! What we look for is the "pre-opening indication" - which will give us an idea of where the stock is going to open. This information is put out by the NYSE Specialist whenever the stock is to going to open any distance away from the prior day's closing price. This is more important than the earnings or the news. We have all seen "better than the street" earnings cause a stock to fall and vice-versa. I adjust the actual bid or offer so that they fit into the bottom one-third of the indication. Let me explain. If my bid price was 22.00, based on our Fair Value calculations, but the opening indication was $17 bid- $18 offer, then I would adjust my bid (only, not ask) to around $17.30 or so. I don't want to buy a down stock near the upper end of it's indication.

We try to always be "aware" of significant news and other factors within the sectors that we trade. I try to make sure my "bootcampers" are working together to follow the pre-market news. I share what I can, but I want them to become "self sufficient" and able to understand the concepts involved prior to heading out on their own.

Good Luck!!

Don
 
Quote from GATrader:

Don, how feasible is it to do OO's on ETFs listed at the NYSE? Might make for less gap against/for you but more manageable ?
More...

ive been playing with this. i have noticed the nyse specialist always opens after the amex specialist. he has a pretty clear indication of what the stock is doing by then. kind of eliminates the advantage of the oo strategy.
if you are going to do opens on an etf you are probably better off directing to the amex.
 
I was long T on the open yesterday. I don't trade the open on stocks in the news, but I tried this one as an experiment. It was profitable for a few minutes by about 15 cents, but because the gap was so big, I was holding for a bigger move. When he broke the opening print, there wasn't much chance to get out. He opened at .30, showed .20 for a little bit, but I didn't get filled. Next print at .75. 45 cents in one print is huge for T. I usually trade 3000 shares in him, but I had cut back to only 800, so it was manageable. But I got almost a buck out of AIG, so it was still a green morning.
 
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