Wednesday August 1, 2012
Here are a few examples of the advantage of placing a succession of orders under the market. Today I bought the following by having orders under the market before the opening.
1 Sept 22 TLT 125 put at 1.34, interestingly I had an order for two but only one got filled, someone else was interested
This is even a better example than RAX below. I had an order for 2 TLT puts at 1.34, a lower price than my previous buys. This required a higher price for TLT, I noticed TLT was down over a dollar for the day yet I got onew execution, how? Here is the answer, someone jacked up the price of TLT over a dollar this afternoon, and it quickly fell back, but that was long enough to get a nice lower price, essential in trading options. If the order had not been there I would not have gotten the price. NOw that I look I had a total fo four orders at that price but only got one, what luck!
25 Shares of EWZ at 51.99, low for the day was 51.87 now back at 52.52
100 shares of gdxj at 18.99, the low was 18.80 just missing my next order at 18.74, now trading at 19.18
I thought better cancelling an order for RAX at 43.74 but did get
25 at 43.54
25 at 43.34, it s now trading 43.52
The low for the day was in the early morning, I doubt one would have realized it at the time but by having the two orders in, and managing to cancel the higher order, I got an average of 43.44 for the two. As Steve Kaplan says, to buy low and sell high, first you have to buy low, this is the way to do it.
I have heard two presentations on Rackspace by their CEO, it is a jaw dropping success story headquartered in San Antonio trading about 2/3 of its 52 week high of 60.55, it has a 70 to 1 p/e which is why I have not mentioned it but th order strategy is still a good example. I also have a position in Globalscape GSB, another San Antonio Standout.
I had an order for 25 SIL at 18.01, got it at 17.92 and then another 25 at 17.91, now trading at 18.16
I have other orders successively lower in similar fashion for these and other stocks we have followed. But the point is that unless one has the order in on one of these quick drops you do not get filled. Trust me this is advice you will not get from your broker. Brokers tend to be paid for execution rather than strategy.