Mystified

[Tommm50]

I must be incredibly naive but isn't the function of the market maker on the NYSE to provide an orderly market in the stock? How do less than 18,000 shares move a stock with millions of shares outstanding by over 4%?? Particularly on a day when AM Best affirms Fairfax's ratings, cites all the improvements (cash, commuted reinsurance treaties, cleanup of C&F's property cat exposure, etc.) and declares the outlook stable. This happens all the time with Fairfax stock.

[Parsad]

It's weighted, so if you have say a block of 15,000 institutional shares selling at an ask that is 5-6% lower (need to get the block sold), and the rest of the shares (remaining 3,000) average out to a ask price of just 1-2% lower, you get the 4%-5% drop that the market maker has to set the floor at.  So that damn institution probably deserves most of the blame!  ;D  Cheers! 

[watsa_is_a_randian_hero]

I must be incredibly naive but isn't the function of the market maker on the NYSE to provide an orderly market in the stock? How do less than 18,000 shares move a stock with millions of shares outstanding by over 4%?? Particularly on a day when AM Best affirms Fairfax's ratings, cites all the improvements (cash, commuted reinsurance treaties, cleanup of C&F's property cat exposure, etc.) and declares the outlook stable. This happens all the time with Fairfax stock.

 

Yeah I've been getting annoyed lately.  Wrote June 250 puts for $3.5 in income and wrote July 250 puts for an additional $7 in income per share.

 

At least ORH is going up.  When it was near $40 I was selling Aug $35 puts and Jun $40 puts and took all of the proceeds to buy Aug $45 and Aug $50 calls.  Selling $35 1 put contract generated enough income to buy 1 $45 call and 1 $50 call.  Puts are priced at a black-scholes implied vol of 41% while the calls are priced at a black-scholes implied vol of 31%.