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Question: What market news causes automatic short sales of stocks?

(Posted by: skahhh on 2007-03-24 09:13:46)

Are there trigger word combinations in news combined with call and put option data along with targeted advance decline ratios that cause some large investors to automatically short sell their stocks in the market? Computers now a days can be programmed to sense these things without the investor doing anything else and even to sell on them automatically!

Posted by: JAW on 2007-03-24, 10:07:45

The answer to your question has two parts. First trade positions in the equities markets (short or long) is not controlled by the trading action of its contracts in the options markets. That would be like the tail wagging the dog. Rather the price of the underlying instrument (equity) is used to determine the value of the option.Is the market affected by the news? yes if you can get the broker or trader to read. The second part is yes program trading can be set to enter buy, sell and short orders and can be triggered by a wide range of criteria.

Posted by: Rahul on 2007-03-24, 09:25:12

Any adverse news about the working of the company, changes in Govt. policies or international crisis can trigger the short selling. No computer can keep track of unexpected events and as such the investor should keep track of the changing scenario to sell the stock in such eventuality to curtail or minimise his losses.

Posted by: Sanjay K on 2007-03-24, 09:39:50

Normally negative news about the company makes the share to fall or any war news or disasterous news brings the whole market suddently down this share may also take a tail spin.