Interesting L2-Situation

Discussion in 'Trading' started by Harry, Jan 26, 2002.

  1. Harry


    Looks great, doesn't it ;)
  2. Harry


    • l2.jpg
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  3. Trader01


    Yes, that is an interesting level 2 picture. JBHT was up four dollars Wednesday. Trucking stocks absolutely exploded last week. The surge in the transportation index is causing some analysts to declare the economy is turning and has bottomed. Roadway and Yellow had good weeks,also. If the economy hasn't turned for the better, there will be some good shorting opportunities at least for swing traders in some of these transport stocks.

    What caused the bids to be higher than the asks? I don't know, maybe there was some inexperienced retail buying trying to catch a leg up in this Arkansas based trucking company.
    I hope you were able to take advantage of this Harry.

    Thanks for the post.
  4. white


    Could you take advantage of the situation?

  5. Trader01


    Theoretically, yes you could have.

    First you could have bought 100 of the ask @ 26.25 and turned around and sold it for 26.52

    gross profit $27

    Secondly, to the next level buy 1400 @26.26 and sell 3@26.52, then sell 1 @26.49, 1@26.48, then 5@26.40, then 3@26.36, then 1@ 26.35

    gross profit $ 227 (if my math is correct)

    gross profit $254 less commissions on 3000 shares, say @ a penny a share($30)...

    net $224

    Can you say, shooting fish in a barrel? This nasdaq really stinks compared to listed stocks, doesn't it?:p
  6. tuna


    Hmmm maybe but i seen the exact same thing happen on thursday with HAL
  7. white


    I have seen those quotes before but just thought that they were stale or incorrect, and could not be hit. Next time I might try.

  8. Of course, unless anyone actually tried to execute against those quotes and succeeded, it's not possible to tell whether it was just a data reporting/datafeed glitch (in which case the condition didn't really exist and there's no way to know what the real state of the quotes were) or if any attempted execution would have been blocked until the crossed price condition was cleared.

    The usual general rule of thumb continues to be if it looks too good to be true, it probably is (especially when it looks like there was free money laying around).
  9. Harry


    No, I couldn't take advantage of the situation - it seems that they were only stucked orders - of course I tried (I never have been quicker, in fact ;) !

    But of course I will try again if such a situation occurs again - Tony Oz describes such a situation in afterhours trading in one of his books - it seems that this L2-situation takes place more often than you might think - but the majority may just be stucked orders you cannot take advanatge of .... :confused:

  10. You do get these situations occurring occasionally. The problem is, you can't go looking for them as you will never find them. They just suddenly appear in the L2 you just happen to have open at that specific time. And like a flash, they're gone....
    #10     Jan 26, 2002