Anyone notice an uptick exemption edge - retry

Discussion in 'Trading' started by cashonly, May 11, 2005.

  1. cashonly

    cashonly Bright Trading, LLC

    I asked this in another thread and it deteriated into an off-topic back and forth, so I'll ask it again, hoping enough time has passed so that we can get some on-topic input.

    I've been watching the uptick exempt stocks and with the exception of extreme S&P down moves, I haven't really noticed any edge.

    Even then, there are significant spreads in these stocks so you better be right.

    But in general, I don't see that they are having any more significant volatility or movement than non uptick exempt stocks.

    Anyone see anything different?
  2. Well there are several options.

    If the spreads are wide, then I want to make a market in these stocks. I want to be a buyer and a seller, and let the week hands come to me.

    If the spreads are tight and liquidity is there, I will use them to hedge my positions.

    When the market bottoms, the shorts in these stocks are easy to squeeze, so I take them long.

    Finally, using these stocks to swing a position for a day or two has been working fantastic, as, I see some artificial movements in them that seldomly lasts more than a day or so.

    Good trading to all!

  3. cashonly

    cashonly Bright Trading, LLC

    All good info!

    Thanks Mike!
  4. size


    I don't see anything in here that is necessarily very particular to sho exempt stocks.

    The exemption in most cases takes away edges rather than adding any. It does help system and hedged traders get into positions.
  5. Since I trade 70% hedged, it translates into some pretty good opportunities. You have lots of flexibility with your positions to make money when the market moves.

    Watch the SHO stocks trade, and you should see some of the opportunties.

  6. I think it is better to trade normal stocks that dont use the rule. Plenty of opportunity to get short without trying to hit a 100 share bid down. it s like 9x out of 10 the specialist sees you coming anyway and is just waiting to squeeze you when your in.
  7. size


    If you are mostly hedged trading, then your opportunities are created or enanced by having a mixed mkt of exempt and non-exempt stocks. If the exemption were applied to all stocks I would guess that edge would be gone.

    For the directional discretionary trader though, which make up the majority of equity traders, the exemption removes edges more so than creating any.
  8. So did anyone hit DIS today? That is exempt, so where are the stories of free money?

    Only real edge Im noticing is that you can bypass the specialist with NX and have precision in your price.
  9. thought about it (dis) but by the time i decided to get in....all done

    just back from late lunch...hard to jump in when you don't know how deep the water is...
  10. alanm


    cash: Are you saying you are seeing wider-than-normal spreads in the exempt stocks (i.e. the spec protecting himself)?

    I was happy to be able to put on an FD/MAY spread the other day pre-market, shorting FD below the previous close (FD is on the "A" list).
    #10     May 11, 2005