Couple Items, including Day Trading Calls, also RE: Rumors.
1. Day trading calls: You can not go beyond your daily buying power at any one point during a day, else you will generate a day trading call. Nonetheless, you are legally permitted in a margin account to go out and back and out and back to your buying power limits. ie. if you had 100k in buying power, you could buy 90k, sell it, buy 99k, sell it, buy 50, buy 50, sell it, etc., althroughout the day. You will designated a day trader, as your pattern indicates this, but you can legal be able to go out and back. Think of buying power as a leash. You can go out and about and whereever youwant as long as you dont go beyond the length of the leash (buying Power) at any one time.
On a side note, if you buy on Monday, going BEYOND your buying power (ifyou have a relatinship with your firm that allows this) you will be required to make deposit to meet Fed call, 50% reg. T,. Nonetheless, if you sell out the position on the next day, most computer systems elminate the Fed call erroneously, but nonetheless, the call, legally should still be met. You can't meet a fed call with a subsequent purchase.
getting back to your situation, it seems like the firm you are dealing with does not book the tickets in time sequence, ie. they proabably dont see the sell, in line with the buys, henceyou would have not problem. Also, you need a margin account, i beleive, to do the sort of in, out,in, out , you are talking about, even ifyou don't go into using the margin.
IRA's, withno margin, must meet all purchases net a days end, regardless of sales. I dont know if this is an "IRA" issue or a non-margin issue as IRAS are not permitted to use margin.
2. Rumors (from a post on wdc thread)
In my experience, noone usually ends up having a definative answer as to where rumors start or come from. They usually start from gossip and wishful thinking, sometimes on knowledge about activity relating to a company...ie.. a secretary tells her freind that xyz company has been visiting and inspecting the books of her firm, etc...she tells this person, they tell another, etc.
Then it spreads, sometimes like a virus, to the point where it hits the floor, discussion groups, broker firms, brokers' desk, traders' desk, etc. Noone knows for sure, hence the word rumor. Noone will say "yes, it willhappen" or "no, it wont happen" because they don't want to to be wrong or have a legal problem.
Nonetheless, rumors only makes stocks move if it has credibility amongst investors. In this stocks' case, I feel that IBM would be a great suitor for WDC. IBM hasnt been hit by margins, etc., they have plenty of cash, they are working hard at getting into hard drive business especially lower end and they could buy wdc's revenues (which they are themselves contributing to) for afraction of reveneus.
Example: lets say dell was buying 2 billion in hard drives. Wouldn't they find it attractive if they could pick up WDC, with 5 billion in reveues (more than the 2 billion they consumer and enough to sell to to others), for the same 2 billion-ish they were paying for the drives and nothing more, especially in light of the cyclical nature of theindustry and the possibility they could have a very profitable component in the next few quarters? I do not recall how close to actual numbers my hypotheticals are, but you get my point.
Nonetheless, I would never simply buy on rumors. MOst rumors do not prove fruitful, yet some do. For example, the banks over the past few qtrs., alexbrown, moneystore, etc. Usually, the stocks run onrumors, then sell back when rumors dissipate, THEN, ifyou believed and still see "action" in stock, is when I would consider, if at all, buyinga possible takeover candidate.
Regards,
Steve@yamner.com |
