Auric,
Thanks for the informative post. What you describe is largely what I imagined, except that I don't know enough about how it all works to fully understand it.
For example, this "voice market" thing you mention. What does it take to be able to be a Market Maker that can sell the stock short and not have to deliver the shares? For how long can that go on? How many shares could a given Market Maker short and still not have to ever deliver any shares? Or is it a matter of time? Do they have some period of time before they have to deliver the shares? This is the part that I probably understand the least.
Another question - when you say TRAV has to "stay on the bid", I assume that you mean that he has to keep buying these 200 share lots that the MM's keep selling short. Why doesn't he require them to deliver the stock? Doesn't he have to put up the money when he buys their short sale stock? This is the part that I don't understand. Isn't any money or stock actually changing hands?
I don't understand the term "trades 2X2 all day long"; is that where I am missing something?
Also, why would the price have gone up 4 points today, under this scenario? Why would TRAV keep buying at higher prices? I can understand that someone might do that if they were just trading stock among confederates, to attract buyers for the boiler room operation (theoretically, if that was what was going on) but with all these MM's getting involved, isn't that just financial suicide for the person buying? I guess that is your point, but it still all seems crazy to me. I guess what is being presented to us "retail" investors here is that this is some kind of a clash of the titans, but that is exactly what makes me suspicious of the whole thing. It just is all too emotional and overwrought for me to buy it all on face value.
Again, thanks for the info, you helped me understand a little more, I think, and I will continue to watch, to see how it all plays out.
Why would it have moved up 4 points today, though? And how come you don't have to borrow stock to sell it short? And what exactly is the point of all the name-calling and taunting?
Barry |
