Thanks for your help in the past. I have another question.
I am assuming that stocks can't go any lower than one-ten-thousandth of a point (.0001). at least I haven't seen any. For instance CSJJ did 65M volume today and swung between .0001 and .0003. If one had bought it at it's lowest and sold at .0003 you would have doubled your money. Who would sell a stock at it's lowest price (.0001)? They would either be losing money or breaking even minus commissions. Why doesn't everybody buy .0001 stocks? If it goes up at all you have doubled your money (or better). There is almost no risk (provided that the company doesn't go bankrupt and isn't removed from the market). I am trying to understand the dynamics of the .0001 stock.
TIA
Posted by BuyTex on :
one theory, or commonly accepted outlook, is that MM's "cellar box" a stock, shorting it into the .0001 - .0004 "cellar," making money all the way down by shorting. Then they hold it there. If the company goes bankrupt, the shorts never have to be covered...
But you are on to something: Buy at .0001 and sell at .0002 for a double.
But the bid has to be at .0002 in order to do that...
Watch the spreads on some of these for a few days; jot down the days when you can buy something at .0001 and then when you could have sold at .0002...
I think you'll find the ones who can consistently take advantage of this are the MMs, who rode it down to these levels in the first place...
Back to "cellar boxing": the idea is that this evolved as MM-response to decimalization. Use to they--and "scalpers" (a certain kind of daytrader)--would work the spread looking for "teenies." For example's sake, say, the spread was 2 1/8 Bid - 2 1/2 Ask. The scalper would "step in front" of the Bid, buying at 2 1/4 then turn around and step in front of Ask, selling at 2 3/8. They'd make their nut on volume, clearing, say, $125 and move to the next one. One an hour made a pretty good day...Naturally, MMs and "specialists" would rake it from their side, too.
Decimilization changed that, so the thinking goes, so MM's responded by exploiting doubles in the .0001/.0002 and .0002/.0004 range...
A side note: bankruptcies and delistings happen all the time...
Also, market orders have been known to go through at less than .0001--but .0001 is the lowest price than can be displayed for trading...
[ July 26, 2005, 23:33: Message edited by: BuyTex ]
Posted by jdog006 on :
Thanks Tex
I guess the trick is to find a .0001 stock that is volatile enough that you won't be holding it for weeks waiting for a bid price of .0002 AND that has a high enough volume that you can move all your shares. Maybe I'll throw a few bucks into one and see how it turns out.
Posted by Vlad4 on :
yeah, jdog, keep us posted on what you find
Posted by blueranger on :
prrm is a good example you buy at .0001 and you can never sell becasue the company sells at that price.... your stuck forever.
Posted by jake_the_snake on :
TLND and BHWK are best bet .0002
Posted by ravioli on :
mlon or another like night fuller 0.0001-$2.37 if I could find one like that I would probably have a heart attack and die from the exitement.Anyone think tlnd could resolve the problems there having I bought this at .30 at post split and sold 2.2 something awhile back
Posted by ravioli on :
also mlon picked up 0.0003 let loose in the dbl zeros
Posted by banger on :
is mlon a risky bet - presently at .0001 Is it difficult to sell once it goes up ?