Stocks and Trading Thread - Channeling your inner Mono

[MadImmortalMan]

As for me, I have a bear call spread on at 141/140 SPY, expires Friday.

We closed at 137. I got the full profit this time. Although what I would have gotten from GMCR puts would have been way better. Still, my spread netted me 30% or so.

I haven't taken the time to properly decipher the stuff here:
http://www.nxcoreapi.com/aqck/3271.html

but it is still interesting - if you want to seek evidence/pattern of high frequency algo trading in today's market, you need to analyze 25 milliseconds charts or less. Fascinating, and scary.

But they provide liquidity!!!1111

Heh. I still think every trade should require a mouse click by a human. But that's me.

[Admiral Yi]

Learned a new term today.  A "Texas hedge" is when a farmer goes long on his own commodity in the futures market.

[MadImmortalMan]

Learned a new term today.  A "Texas hedge" is when a farmer goes long on his own commodity in the futures market.

My father in law does that with hog futures and pork bellies. It evens out the ups and downs, making their income more predictable too.

[Admiral Yi]

My father in law does that with hog futures and pork bellies. It evens out the ups and downs, making their income more predictable too.

You might not be getting it.  Farmers should sell positions to hedge.  A farmer who buys a position is doubling his exposure.

[Ed Anger]

What a clusterfuck.

MY GE STOCKS. 

[citizen k]

from April 13:

http://www.bloomberg.com/news/2012-04-13/jpmorgan-said-to-transform-treasury-to-prop-trading.html

today:

http://www.bloomberg.com/news/2012-05-10/jpmorgan-chase-says-cio-unit-suffered-significant-loss.html

[MadImmortalMan]

So...they put a Greek in charge of the part of the company that's supposed to be protecting the bank from risk. 

[PJL]

Does anyone think that Facebook is worth a short when it goes onto the market? Probably not the first few days, but when the initial hype dies down?

[DGuller]

But they provide liquidity!!!1111

I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

[MadImmortalMan]

But they provide liquidity!!!1111

I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

Yeah, I think you're right to wonder. There are times when they actually suck all the liquidity out rather than facilitating trades. Particularly when the majority of trading is going one direction. We've seen the HFTs actually drive the spreads out of control, rather than keep it tight.

[MadImmortalMan]

So the big stink at Green Mountain is that the Chairman (now ex-) Robert Stiller took out loans against his stock to buy a yacht and some other stuff. Then when the recent price drop happened, he got a margin call on those loans. That triggered the broker to sell all his stock. You can imagine how the market reacts to the chairman of the company dumping all his stock at once of course. So he's been fired as chairman for inappropriate behavior or someshit.

[DGuller]

So the big stink at Green Mountain is that the Chairman (now ex-) Robert Stiller took out loans against his stock to buy a yacht and some other stuff. Then when the recent price drop happened, he got a margin call on those loans. That triggered the broker to sell all his stock. You can imagine how the market reacts to the chairman of the company dumping all his stock at once of course. So he's been fired as chairman for inappropriate behavior or someshit.

  I thought that only happened in Railroad Tycoon 3.

[MadImmortalMan]

But they provide liquidity!!!1111

I wonder if that's actually true.  I can see how they can provide liquidity in a sense that they would lower the bid/ask spread.  On the other hand, I can see this kind of frantic trading on very thin margins creating liquidity crises, when something sets off a chain reaction.

Yeah, I think you're right to wonder. There are times when they actually suck all the liquidity out rather than facilitating trades. Particularly when the majority of trading is going one direction. We've seen the HFTs actually drive the spreads out of control, rather than keep it tight.

Speaking of which:

http://premarketinfo.wordpress.com/2012/05/07/two-years-after-the-flash-crash-spreads-are-narrower-and-liquidity-deeper-than-ever-before-guess-again/

[MadImmortalMan]

Anybody know what company is likely to get the contract to print drachmas? Is De La Rue a good guess? Isn't there another big one in Germany?

[alfred russel]

Can somebody explain why I should care or be concerned about the "flash crash"?

There are high frequency computer algorithms driving trades and there are people that try to take into account the value of the underlying asset (company, index, etc). I'm in the latter category. If a program (or cascade of programs) completely jumps the shark, in the unlikely event I'm paying attention I get to either buy at a steep discount or sell at a windfall. Winnings for me.