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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: aldrums who wrote (9497)	7/13/2000 11:16:28 AM
From: LPS5	Read Replies (2) \| Respond to of 18137

First of all, to open a stock at $73.50 that had been trading - more importantly, closed - at fourty or fifty-something bucks the day before would be to completely disregard the charge that specialists (and OTC dealers, as well) have to maintain a "fair and orderly market" barring unusual market conditions. In my experience the term "unusual" means just that: really weird, exceptional situations; not just, for example, "heavy volume." If the market forces weren't there, they can't simply jack a stock up. That's the sort of thing a trader can get heavily fined and censured for, and if offensive enough, I believe the exchange can take the specialist franchise for that issue away from them. But might the price get up there in a few days? Sure. Plus, to jack the stock up in light of the situation with the takeover you describe is inappropriate. Without getting into investment banking concepts (I'm very busy at the moment), here's a brief overview: in some takeovers done at a premium to the market price, the market price runs up to or surpasses it. In others, a huge gap between the market and the takeout sits there, oozing and juicy. Complicating the scenario is the fact that many of these acquisitions are done in combinations of cash and stock, and more importantly that they aren't always for all shares outstanding; sometimes one company will buy a certain percentage of the stock at a premium, etc. So, while some purchases do allow for an individual to buy the stock in the market and get a higher value for it soon thereafter (quasi-risk arbitrage), many times there are circumstances that make this unfeasible, unlikely, or impossible (from an ownership point of view). Again, if I wasn't on my way out the door I'd give a little more, though IB isn't my forte. LPS5