Ok, here's what happened to me today. I bought 3k of cls at just under 47 in the first few minutes today. After about a 1 pt profit, someone put in a bid for 2800 on island at around 73. Having a quick trigger finger, I whacked them and instantly had a 57k profit. It didn't even occur until about 10 minutes later that the trade may be broken. At that point, I figured i'd protect myself just in case, and I shorted 500 shares (that was all cyber had). 20 minutes later, Island calls me up to ask if I want to break the trade. OF course I said no, but they said that if I refused, it would have to go to arbitration, and I'd need an expensive lawyer, and that there was no chance I'd win against a big firm. Also the contra party offered me 40c a share to break it, which was about a k in free profits. At this point dont forget that I had about 7k in cls profits if I was given my shares back, so I agreed. By the time my shares were retransfered to me, cls had tanked, and I only made 2k on the trade + the k from the contra party (that I have yet to see transfered to my account). Has anyone had this happen to them? In the future, should I go to arbitration? Should I have asked for more than 40c from the contra party. I'd have loved to just split the differnece, or 1/4 of the difference even. 48.25 or so which was the high of the first few bars was my sell point, so I would have made 5k, and instead I only took in 3k (minus all the gains that I missed while handling the retarded phone calls) What are my other options. I assume that I have none now. What exactly are the rules on these things. I asked a mm buddy of mine, and he already told me that I can't win, but I'm not positive he's right. All this mess ruined my day (not to mention a previous hangover) I think I would have been better off not hitting that bid I guess.
I don't think you had any choice. In fact, you we're quite lucky that you were offered cash to flip out. On an obvious outtrade the trades will get busted. Even if the other side did not have an attorney, I am fairly certain you would have lost arbitration.
P... I would have done the same as you, hitting the bid... never occurred to me that the trade could have been erroneous. What if it was a take over, or dynamite news... I would like to hear more info about "broken & out trades" Didnt realize there was such a thing, let alone it could happen to us. -Hoyler
From what I understand there's a time limit of either 1/2 -or 1 hour?-with these outtrades-If your're not called within this time frame trade sticks.
Happens all of the time on the floor from my experience. One of that nature was so far away from the bid /ask spread though that Pre you would have lost in arbitration. Limbo they have a lot longer than an hour. It takes 3 business days to clear a stock. Usually something like that would be caught on the overnight books of both clearing firms. Be glad you were still profitable with this trade. Don't get upset and know there will be other good trades in the future. Dont' trade with a hangover either. rtharp