ST Alpha - "I don't understand how Cantor can make the 10% change limit work." (Reading a Post)

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I don't understand how Cantor can make the 10% change limit work.

Posted by ceregon Dec 8 '08, 13:54

Suppose a big budget action movie is expected to do big business and people bid the price way up. Speed Racer was all the way up to 110, but then it opened poorly. If they limit price movement to 10%,there will be situations where lots of people want to sell (like speed racer at 110-11=99), but nobody wants to buy it at that price because everybody knows it won't gross anywhere near that much.

Other than that. It looks cool and I can't help admitting that this combo of movies & investing to a movie-loving, finance/quant MBA, has me more amped that just about any movie on the horizon (except Avatar, of course).

Responses:

I expect they're going to make it substantially different from HSX to make it a viable real-world exchange. -- nm - TaurusII Dec 8, 13:59 1
- it works fine (other than the 10%), but because they can't have adjusts/freezes, there will be some hectic trading on fridays & saturdays -- nm - ceregon Dec 8, 14:07
Excellent point. I guess you're just hosed in that instance. -- nm - emoticripple Dec 8, 13:56 1
- It's even worse, in addition to everybody wanting to sell, there also be people wanting to short. -- nm - ceregon Dec 8, 13:58

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I don't understand how Cantor can make the 10% change limit work.

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