Nirmal, the investor who Limit-Ordered to sell at 120 thinks that the stock is going to reach 120 before the order expires ( in 2 months?)...
I use Island Quotes, although the Orders are just a fraction of the total limit orders for the stock, to feel the PULSE of the Market for the stock. We always talk about Bulls and Bears, but in reality there are no Bears in the stock market. We start as Bulls, for example, during the Initial Public Offering and later become Cows that MOOve on to Greener Pastures. So, in Island Quotes, if I see for example that everytime the stock reaches 99 (like it is doing today) and doesn't move up higher because so many SELLS appear around that price---then I know that the High for the Day is being set at that level (unexpected Good News, of course, will cause the stock to break the resistance at 99 to head higher). As a Day-trader, I then go ahead and sell some, then wait for the stock to go lower before I buy back those Options I sold. Using the same example, if lots of BUYs appear whenever the stock hits 98 and the SELLs are set well above, say in the 100s and above, then I have a feeling that the prospective Cows or sellers want more money for their shares. It is a Bullish sign also if the spread of the Buys and Sells is narrow---indicating that the Bulls are enthusiastic and the Cows can get more money for their shares...Hope that helps... |
