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Biotech / Medical : VVUS: VIVUS INC. (NASDAQ)
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To: RT who wrote (6032)3/21/1998 12:44:00 PM
From: VLAD  Read Replies (1) of 23519
 
RT
No, call me stupid. My explanation was erroneous. My view was that ML was buying at 10 1/4 as a floor price(ie he will throw whatever his total $ limit was to prevent a price decline and eventually have a much larger profit later on those shares). If he sold at 3/8 he would indeed be making 1/8s however, if he shorted the shares he bought earlier at 1/4s at 3/8s (you can't short shares you don't have) and was covering at 5/16 while he was first up on the bid/ask then he would have been making a lot of 1/16s on market orders as long as he remained on the inside on both bid and ask. Whenever a market maker can get on the inside of both the bid and ask, he is making a profit since the spread is stacked in his favor not ours. Sorry for the confusion and thanks for catching my error.
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