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When I sometimes scan down after hours price changes, I notice tickers where there is a single last transaction that has a huge effect on the AH price.

This is not an anomaly. I see it everyday on a variety of tickers. Sometimes you see an AH transaction like these that is unexpectedly followed by a regular AH transaction. For example, in the attached image, if there happened to be another AH transaction at 5pm EST for say 58 shares at $8.21, some time after that, before AH close, there will be another single share transaction like the one at 4:02pm to drop the AH price by 8% in this example.

Who benefits from that price being skewed in one direction or another? Is this AH anomalous price used by institutions to determine if a trader/investor gets a margin call etc.?

Bob Baerker
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Captain jeff irons
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1 Answers1

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Sometimes, it's just bad data which is subsequently corrected.

Another possibility is that someone made a fat fingered trade. During after hours, bid/ask spreads tend to widen, sometimes dramatically. If someone inadvertently places a market order, they get a bad fill and you see a large price change.

Brokers are aware of real problems versus anomalies. The average daily volume for TNP is nearly 100,000 shares so if 100 shares trades at an unrealistic fat fingered absurd price, it's not going to create a margin call. And even if it did, when trading resumes in the morning, it's self correcting. The exception to this might be sleazy brokers like Robinhood but a traditional discount broker would not act on anomalous trading.

Bob Baerker
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  • Thank you for the response. I see it so often, that I am convinced it’s not an anomaly and it may not be institutional either. But perhaps it is the MM doing it? There is someone doing it for a reason and it occurs in both directions and they must derive some benefit for manipulating that price. It’s amazing how much the market cap at that instant is moved by such a tiny trade. I’m looking at historical cases empirically to try and determine if there is a correlation to gapping up or down at the subsequent premarket open. Thanks again sir – Captain jeff irons Sep 17 '21 at 00:02
  • Though it's illegal, way back when I knew some 'boutique' brokers who "Painted the Tape" on the last day of the month by executing a small trade at a higher price so that client's monthly statements looked better than reality. Other than that, what constructive reason would anyone have for trading one share (from another comment of yours) in during after hours? It has no effect on anything. In addition, even if that last trade was far afield from current price, the bid/ask quote would immediately revert to reality. – Bob Baerker Sep 17 '21 at 16:31
  • Today’s example is Zumiez $ZUMZ. Closed at 40.90. Single share trade afterhours at $37.37 to give an artificial -8.64% after hours drop. Thank you again for your responses. – Captain jeff irons Sep 20 '21 at 20:29
  • OK, I see that one share trade for $37.37 at 16:09:42 PM EST. I don't know what is going on but I'll offer another guess at a possibility... There is (was?) a 'taker' exchange (maker/taker fee structure) that offers a rebate for taking liquidity. HF traders post one share orders in many different stocks at better prices, seeking price discovery, attracting routed orders. This was explained in "Flash Boys" by Michael Lewis. If this is the case, I can't imagine how this would be effective during after hours on a low liquidity stock like ZUMZ. – Bob Baerker Sep 20 '21 at 21:29
  • BRILLIANT. Thank you. I’m a self-taught investor who appreciates how blessed I am to have search engines but they don’t answer everything. But they do answer things like “what do you call buying a put and selling a call at the same strike price OTM?” I saw a $25 mil trade on NVDA on Friday with a strike of $150 and learned that this pair of derivatives when combined create a “synthetic short” because the payout graph mirrors a short positions payout. Saw a call and put sold at same strike and learned the short straddle. Thanks again – Captain jeff irons Sep 21 '21 at 22:11
  • My latest self-taught theory I’ve been using is scouring open interest to see where the deep ITM is. Retail buys OTM and ATM calls. Large deep ITM research has been transformational for me. Last week, I made 400% on DOW puts. It was so lopsided Deep ITM puts versus calls, I upped my 5% of my portfolio allocated to derivatives to almost 10% – Captain jeff irons Sep 21 '21 at 22:18
  • Congrats on the DOW put trade. However, be aware that open interest does not price the direction of price. It only signifies liquidity. – Bob Baerker Sep 21 '21 at 22:36