Jeff,
As you pointed out, CSCO was coming out with earnings the day you purchased it, which means much higher volatility and wider spreads. While I agree, it sounds like your timing was less than great, put yourself in the market makers shoes. He has to sell you a stock (generally up to 1000 shares) at the current offer price. He may not be able to buy it back to cover that sale before the stock is up another point. In the meantime, if the stock is moving, as is usually the case with stocks coming out with earnings, he is also selling stock to several other investors who are hitting his offer, leaving him short several thousand shares of a stock that is going through the roof. This can make someone very uncomfortable, very quickly. Trying to avoid this situation is difficult, if not impossible, since the only way a retail client can trade is through a brokerage firm, and all of them either make markets or use a market maker to execute the trade. My personal opinion is to use a broker that does not make markets in stocks to avoid a conflict of interest. One of Schwab's largest profit centers is Mayer Schweitzer, one of the largest market makers on the street. Good luck. |
