Odd-eighth avoidance as a defense against SOES bandits

Eugene Kandel*, Leslie M. Marx

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


We model the behavior of Nasdaq momentum traders, also known as SOES bandits. We show, all things being equal, that the profitability of SOES bandits decreases in the bid-ask spread, but increases in the effective tick size. The patterns we observe in the data provide support for the model. We then discuss the plausibility of odd-eighth tick avoidance by market makers as a defense against SOES bandits.

Original languageAmerican English
Pages (from-to)85-102
Number of pages18
JournalJournal of Financial Economics
Issue number1
StatePublished - 1 Jan 1999

Bibliographical note

Funding Information:
We thank an anonymous referee, Michael Barclay, William Christie, Ludger Hentschel, Saul Lach, Paul Schultz, and G. William Schwert (the editior) for their comments. We thank Jon Lewellen for valuable research assistance. Kandel acknowledges financial support from the Krueger Center at Hebrew University.


  • G10
  • L10
  • Nasdaq
  • Odd-eighth avoidance
  • SOES bandits
  • Tick size


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