Hacker News new | ask | show | jobs
by lloyd-christmas 3661 days ago
As a prior equities trader, these were our year-makers if it happened during trading hours.
1 comments

Can you elaborate on this for a non-trader?
LNKD closed at $131 per share on Friday and opened at $191 on Monday. That's a $60 move. The news happening outside of trading hours means that all the bid/offers didn't get executed, just that the valuation changed of currently held stock. If it happened during market hours, that move would 1) be more exaggerated due to human psychology, and 2) you'd actually be able to trade the news. If you managed to catch 1,000 shares at 131 before it jumped, you'd be making $60k on an investment of $131k. If you managed to catch only half of the move on 10,000 shares, that's $300k in profit on a $1.3m investment. To put it in perspective, day 1 on my job I was given $1m to "play with and get to know my keyboard shortcuts".

http://f.ptcdn.info/713/028/000/1424666722-5-o.png

In the image above, the stock price is 3.85. The green columns are bid/ask. It shows that there are 40,000 shares people are trying to buy at 3.84, 33,100 shares to buy at 3.82, etc. On the other side, there are 5 million shares someone is trying to sell at 3.86. If this imaginary stock suddenly was bought for $5.00 per share, You'd be able to buy 5 million shares at 3.86, (for about a $20m investment) and sell all of that for $5, for a profit of $5.7m (this is obviously the ideal case. More likely, those people selling at 3.86 would try to pull their offers before people could buy it, and other people would be trying to buy those 5m shares as well).

In that context and in regards to LNKD, it didn't really trade all that much volume prior to this, so you wouldn't be able to buy all that much stock. But a $60 change is pretty massive. Even catching a fraction of the move is pretty much "free money" just for having your hands on the keyboard.