ST Alpha - "the 10% limit is offset by this rule... at the end of the day they can change the market price of a contract by a big margin" (Reading a Post)

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the 10% limit is offset by this rule... at the end of the day they can change the market price of a contract by a big margin

Posted by Stewie (aka whysoserious) Dec 8 '08, 14:19

Subject to the provisions of Rule IV-5(c) and Rule IV-5(d), the Settlement
Price of a DBOR Contract shall equal the last reported trading price of such DBOR Contract on
the applicable Trading Day; provided, however, that, as of the End of Trading, if (i) the best bid
is above or (ii) the best offer is below the last reported trading price of such DBOR Contract on
such Trading Day, the Settlement Price shall be equal to such bid or offer price.

...so in the case where there is a huge swing from the expected box office, the price is essentially stuck until the end of the day, then in the case of a big short, it would be adjusted to near the level of the highest bid, which could be much lower

Responses:

Wow, I'd lose money not knowing what I was doing. -- nm - The Calico Cat Coalition Dec 8, 14:23 1
- thanks, i haven't read all 19 pages of the document yet, it still sucks to be on the wrong end of a short like that, but at least they cover the event -- nm - ceregon Dec 8, 14:28

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the 10% limit is offset by this rule... at the end of the day they can change the market price of a contract by a big margin

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