What Is A Block Trade?

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.

As a trader in blocktrades you have to know what to do and you have to act fast.

Block trades are a great way to gauge near-term intraday interest in a stock, 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.

Block trades i may say 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.