trading nyse specialists

[ilganzo]

Quote from dcunited:

I think the poster is using this strategy to capture quick, minor pullbacks. As long as you covered within the next 4 or 5 prints after the big gap print, I think one could be profitable. (they'd get crushed here and there but overall I could see someone making that work)

Assuming the specialist "spreads up" 15 cents (like for the thread example) we're looking at a 14/13 cents profit (max., if the spread goes back to 1 cent, minus commissions) vs. the risk of another spread in the same direction, say 5 cents loss on average (plus commissions, but it could be easily more than 5 cents). I've seen the trend continuing in the same direction of the specialist spread too many times, even after a relative big print (was the case today in SLB).

I'm not saying this isn't a viable strategy, just evaluating the overall risk and meaning that there are other variables to consider before jumping in (open book hedge, previous prints, state of momentum, specialist "habits").

 

[jem]

People used to tell me I was wrong for saying the ge specialist hit bids in down markets and he was a crook --- until he got arrested and did the perp walk off the floor.

The NYSE has rules. The NYSE breaks rules.

If you do not believe me check out all my complaints about the change to pennies in the archives. And ge was my living after lu and emc became low priced stocks.