Despite the surge of trading and almost instantaneous institutionally driven repricing following significant news after the close, there remain opportunities for the retail trader which doesn't require rapid fire trading. Let's take a close look at a recent earnings event driven trading on Whole Foods Market, Inc. (WFMI) in the after-hours and following day.

Whole Foods Market released disappointing earnings after the close on Wednesday, May 9, 2007. According to MidnightTrader.com, WFMI dropped immediately following the news of an earnings and sales shortfall, plummeting from the regular 4 PM closing price of $45.80 to just under $43 or better than 6 after hours. It slid further the next day, losing a whopping 11.7 within 24 hours. No need to trade within seconds or even minutes following the release, giving night traders with access to real-time after hours trading information plenty of time to digest the news and accumulate a short position.

Clearly, the shorting opportunity was easily available at anytime during the after-hours and early pre-market sessions. By the time the opening bell rang, the downside was already priced in. Too late for the rest of Wall Street to participate.

Liquidity you ask? Not a problem. WFMI recorded after hours volume that night of over 1.7 million shares, better than 50 from the 4 PM price of $56.15 to $54.15 by the 8 PM close of after hours trading.

Opportunity Identification & Risk Management

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