Good questions on DBCC, Len. Here's my two cents:
I've played IPO's before on their date of issue. It's like riding a rollercoaster without a seat belt: dangerous but a thrill. Of course, you can't make money from riding a rollercoster, but anyway....
I would expect the IPO to come out of the gate like a bullet. It will race from its purchase price ($12 or so) up to a crazy number (say $55), then it will hover, jump, dance, and suddenly come bouncing down. What you need to do when you're watching is to make a note of that high, divide by two, then put in a limit order to buy at that level. So, for the purposes of this example: (55 divided by 2= 27 1/2). Put in an order to buy at 27 1/2. You may or may not get hit. If you do, put in a limit sell order immediately! Set it for a couple of points above the buy (as Jeff says, don't be greedy). You can watch the wave-like action in this way all day long, setting a sell limit about hafway below the prevois high.
Remember, this is just my two cents worth. If the market is down that day, set your buy limit lower. If you notice the issue making ever-higher highs, set your buys at 40 to 45% below the highs.
Any other suggestions on how to play IPO's. And does this sound nuts? |
