Revisiting the Yahoo! Badlands

Once again, Cramer ventures into after-hours trading in Yahoo! and discovers just how 'off' this market is. But if you play it right, you can make big money.
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Talk about imperfect markets. The trading in Yahoo! (YHOO) , right after the announcement of its admission to the S&P 500, showed me once again that there are tremendous opportunities out there for anybody with some guts and conviction.

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I love Yahoo!. But that doesn't mean I am averse to selling a little now and then when I think it gets out of control. On Tuesday night, seconds after the S&P blessed Yahoo!, a 232 bid surfaced in

Instinet

. That seemed high to me. Remember, I have overpaid

before for Yahoo! after hours, so I had my antennae up for opportunity.

I offered 1,500 at 233.

I was taken within seconds.

I put out another 1,000 a quarter-point higher. I was taken again.

So I raised my offer to 234 for a thousand. Boom, taken again.

Now, I am thinking, heck, is there a price this guy won't pay? I walked away -- went for a bottle of

Poland Spring

.

Sure enough, the 232 bid disappeared.

Uh oh, where did he go?

I offered 1,000 at 232 1/2. I got taken again. Then I hung out at 233 for a couple of seconds, for 1,500 shares, and I got taken again.

Enough is enough.

I was not selling any more. I was not offering. I was going home. This guy obviously had some target in the high 230s, I figured, and tomorrow he is going to be lucky to get it that low. He has an agenda. I don't. I am just a sightseer.

As I left the office, he took the stock up to 234. Darned if I am selling any more. I got in the car and checked in on the way home, and the guy was still trying to buy it at 234.

What a dope I was to try to sell it lower, I said to myself. I called

Jeff Berkowitz

and told him that I thought we were going to see 235 tomorrow at the opening because of the huge buy interest. I told him about the aggressive bids and fierce reaches for stock. He agreed: Don't sell any more.

Sure enough, I came in to work and a buyer wanted to pay 233 for stock.

Amazing. This level, which seems too high to me, must seem much too low to these buyers. They want it badly. Again, I decided to stay away from the offering. Again, I kicked myself that I let it go so easily the night before.

Then, suddenly, it was 9:30. And the stock opened at 230 and traded straight down to 226.

All of that buying was just wrong. Every bit of it. Every ounce of the selling I did was right. The only mistake I made was not selling thousands upon thousands of shares to this willing dope.

The whole after-hours market was way off.

I bought back all of the stock I had sold the night before during the morning hours. I booked a nifty short-term trade. And I marvel at how "off" these after-hours markets are.

If you get it right, it is where big money can be made.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Yahoo!. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

jjcletters@thestreet.com.