Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
No. of Recommendations: 1
Strange. Several million shares of B shares sold within minutes of close. One order for 1.2 million after hours and another for over 800k.
No. of Recommendations: 2
No. of Recommendations: 13
Strange. Several million shares of B shares sold within minutes of close...
Stuff you see as "after close" trades often aren't. They're often block trades that are reported after close, not necessarily trades that actually took place (initiated+filled) after close.
Since there is some obsession about option expiry dates, note that typically brokers will automatically assign expiring options that are in the money. If those are calls, they need to buy large amounts of stock for you at "market on close" (MOC) price. I would have expected those to get reported as volume of the closing auction volume, i.e., end of trading but technically within trading hours, rather than after hours. But (a) I don't really know, and (b) wild speculation it could be both factors: brokers settling some MOC trades among themselves and then reporting them?
Other factors for the obsessed:
Stocks with large numbers of deep-in-the-money options outstanding tend to have price weakness at expiry dates as assigned stock gets sold, followed by a rebound.
Stocks with large numbers of near-the-money options outstanding will tend to close very close to a heavily used strike price, on high volume and volatility towards the end.
I'm not sure any of that matters, of course. One might speculate that Berkshire might outperform the market on Monday if the "rebound" effect above happens. Buy a share before market open : )
Jim
No. of Recommendations: 2
That “rebound effect” opportunity may have already passed. Not long after the 4PM close it traded $3 per share higher than the close, finishing AH close to that higher price.
No. of Recommendations: 0
Not long after the 4PM close it traded $3 per share higher than the close, finishing AH close to that higher price.
Since the holders of BRKB options can decide later than 4pm (I think till 5:30 pm) whether or not to exercise their options, those holding 495 strike calls are actually in the money and will exercise those options, or their broker will automatically exercise them.
No. of Recommendations: 1
Strange. Several million shares of B shares sold within minutes of close...
The good news is this was exactly balanced out by several million shares of B shares being bought withing minutes of close...
Stuff you see as "after close" trades often aren't. They're often block trades that are reported after close, not necessarily trades that actually took place (initiated+filled) after close.
If that is actually true, can you tell me more about the mechanisms of those trades?
What I am aware of is that just as you can choose limit or market trades when entering your trades, you can also enter trades that will execute AT market close, and if you enter trades after market close but do not specify they should be traded in the aftermarket, they will be executed AT market open the next time the market opens.
If a trade is made at the market-close price, I don't see how that trade can take place BEFORE the market closed. Since the price at market close is not set until, well, Market close. So I would have expected large spikes of trading showing at market close to actually be executed at market close, or else how do they get the right price?
Of course they can be entered long before market close but then they just sit there unexecuted until market close.
Trades at Market Close are performed at a slightly different algorithm than other trades during market open. All the orders for market close, plus presumably all the orders for trades which have not executed yet are put in a list. The algorithm, as I somewhat vaguely understand it, finds the price that would maximize the number of share orders that would be executed, and then that is the market close price. When I say the price that would maximize executions, I mean that if you declared the closing price to be slightly higher, there wouldn't be as many buy orders to fill or if you made the stock price a little lower there wouldn't be as many sell orders to use for the buyers.
This mostly seems to be the same thing that happens at each market tick, except when the market is open it is happening continuously so there are very possibly only zero or one new order added to the list of open orders during each tick, whereas at market open and market close there are a bunch of orders added simultaneously, so instead of executing or adding to the list of unexecutied orders each trade as it comes in, there is a collective approach to finding the price that removes as many orders from the unexecuted list as possible.
I don't have really any idea why someone would choose to execute at Market Close. Maybe they are less vulnerable to high-speed trading harvesting some of their execuition price? Anybody know why you would choose to execute at market close?
R:)
