What Every Trader Needs To Understand About Block Trades

If you don’t know what a block trade is or have never used block trades as part of your trading strategy, you may be missing out on some profitable opportunities.

On Thursday, June 29 at 5:00 p.m. ET, Benzinga Pro will be hosting its latest installment in a series of 30-minute educational webinars instructing traders on how to get that critical edge over the rest of the market. In this week’s webinar, Benzinga Sr. Newsdesk Analyst Brent Slava will be discussing how traders can interpret and use block trades.

Benzinga Pro issues real-time news alerts for subscribers every time the newsdesk spots unusual trading activity, but traders have to know what to do and they have to act fast.

"Block trades are a great way to gauge near-term intraday interest in a stock," Slava says. "While it can be hard to determine if a block trade will be positive or negative for investors of a stock, the fact of a block trade can at the least show traders' attention on a name."

What Is A Block Trade?

Block trades are single, large trade orders, typically placed by institutional investors. Single trades of Nasdaq- and NYSE-listed stocks that are at least 10,000 shares are typically considered to qualify as block trades. Since only institutional and extremely wealthy investors can afford to make trades this size, block trades are typically seen as “smart money” trades.

For example, back in May, Spirit Realty Capital Inc (NEW) (NYSE: SRC) shares tanked more than 24 percent to as low as $6.48 after a disappointing first-quarter earnings report. However, Benzinga Pro reported a series of block trades of at least 450,000 shares each the following morning starting at a price of $6.90.

The buying triggered a three-day rebound from $6.90 to $7.56, represented a 9.5 percent gain for traders that quickly identified the first block trade as a buying opportunity. Of course, they first had to know what to look for and how to play it.

Traders interested in learning more about the potential of block trades can register for Thursday’s webinar here.