Warrant price from MM

[GreatPig]

What sort of market making is this?

It's been like this since open, and is a DOW put warrant so the price doesn't usually change through the day.

Just was well I don't have any I want to sell.

GP

 

[RichKid]

What sort of market making is this?

It's been like this since open, and is a DOW put warrant so the price doesn't usually change through the day.

Just was well I don't have any I want to sell.

GP

thx for the heads up GP, it isn't a fair contest now is it? dodgy market makers...let's hope that figure isn't just a default figure...worth calling up the mm direct if it's a real issue. Hard to do much about this type of risk other than to use different instruments.

 

[GreatPig]

It's still showing that price.

I was considering buying this warrant, but what's the point if the MM is just going to pack up its bat and ball and go home when the DOW has a big drop?

The price was around 21 cents yesterday from memory, so if the displayed offer is the real current price, then it's more than doubled over night.

GP

 

[GreatPig]

Okay, they have a real bid and offer now.

But it's only 26.5 and 27 cents, so about a 25% increase from yesterday (I thought doubling seemed a bit much ).

GP

 

[sails]

I have found warrant pricing to be quite unreliable. IV levels tend to be higher than that of corresponding options and the spreads can be quite wide.

Some time ago I was observing an instalment warrant on ex-dividend day. It was one of those days when the US markets were up heavily overnight and our market opened higher. If I remember correctly, the stock in question did not drop much at all from the previous day's close and continued to trade up. However, the warrant did not follow the underlying share price and dropped the full dividend amount from the previous day's close. Having already seen some pretty wild pricing in warrants, watching that scenario really put me right off trading them!

 

[GreatPig]

Looks like a common thing. That same DOW warrant is currently showing 5 cent bid and 55 cent offer. Maybe after a big down night it takes them a while to figure out what to do.

But I guess the DOW is not going to change through our day, so there's no real hurry with that one.

I don't trade warrants very much, mainly just intra-day to pick up small promising moves if I have time. Nothing too untoward typically happens with market making in those cases.

Have to start looking at CFDs though some time. The number of put warrants is very limited.

GP

 

[GreatPig]

Yep, DOW warrant quote back to normal again now.

GP

 

[GreatPig]

A pretty rugged spread on an XJO put warrant at the moment too.

Just as well it's normal on the call warrant I'm currently holding (ie. half a cent), but even with that one the MM has disappeared a couple of times today for 10 or 15 minutes each.

GP