Filling an order from the specialist's batch?

Discussion in 'Trading' started by FastandFurious, Sep 4, 2006.

  1. if you trade a stock that has light volume and not very liquid and you trade with sizes of will you get filled on New York if the price levels in the open book for that particular price level you are trying to get is less than 1000? Will the specialist fill you from his own inventory? What will happen?
  2. anyone?
  3. rjv27


    I am assuming that you are going to sell the stock at the market or otherwise your question wouldn't make sense. If there is no liquidity on the openbook, the specialist will just spread the stock down to a certain level where he will feels comfortable buying the stock were he will not lose money.

    For example, look at stock AMN on 8/31/06 at 13:35pm. The stock has avg. daily volume of around 30,000/day. It looks like someone went market 3700 shs at 13:37 the stock was trading at 71.37 to 71.54, the specialist spread the bid quote down to 69.61-71.54 to show that he was going to print lower. He ended up printing 3700 shs a point lower at 70.36 at 13:37:14. If you look at the chart you will see the stock went all the back up to 71.53.

    Hope that answers your question

  4. I was thinking of using a limit order. But yes, a stock with that kind of characteristics, what would happen if I were to sell say 1000 shares limit?
  5. rjv27


    Well if I use that same example as above and you place a limit order to sell at say at 71. Assuming that there are only 3 bids of 100shs each at 71.25, 71.15, 71.05, and no buyers around. 1 of 2 things can happen.

    1. The specialist can fill your 300shs at the 3 bids prices on the openbook and place the remaining limit order on the openbook, not likely


    2. He can spread the stock down and give all the bids price improvement and fill part or you whole order at 71 (he would take the other side of the trade). If he fills part of your order the remaining shs will be placed on the openbook as a limit order to sell.

  6. in the first scenario, my fill would receive the average of the three bids no? there for price improvement for me.

    In the second scenario, basically I got screwed no? He spreads the stock down, fills me, then spreads it right back up?
  7. rjv27


    1st case, you don't get the average, you actually get the price of the 3 bids. So you would get 100shs executed at 71.25, and 100shs 71.15, etc...

    2nd case: you are not getting screwed because you put in a limit order in at that price. If you don't want to sell it that low, just put a higher limit price. You would get screw if you place a market order, because then you are at the mercy of the specialist. :eek:
  8. right, in 1st case, that's what I thought, but in my position window, it would show the average of the three prices and the 300 shares. I understand what you are saying

    in the second scenario, I get the price I wanted to sell no?

    so all in all, I"m not really getting screwed on anything?