Hi WSOers,
I just learned about IPO flipping today, and I was interested about the typical stock price rise during first trading day, so I did some research on IPO flipping. I learned that brokers discourage flipping IPO stocks and might even blacklist traders for it, so I thought if there's any way to avoid risking to be blacklisted while still earn a profit on the IPO day. Instead of selling the shares at the closing of first day, here are a couple of random thoughts:
- Shorting the same amount of shares at closing, but this is pretty much the same thing as selling your own shares, so I'm not sure if this is acceptable for the brokers.
- Buying put options, but I'm not familiar with the volume of the options market first trading day, and also the price of options reduces profit.
- Writing call options? Same logic as second point, earns an immediate profit, but does not limit downside.
Of course, I just thought about it today during my undergrad Finance class, so this might actually be completely wrong, or just common sense for everyone. But any thoughts on this subject is greatly appreciated!
Way too quiet in here. What about these resources:
I hope those threads give you a bit more insight.
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