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Technology Stocks : America On-Line (AOL)
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To: Steve Robinett who wrote (29624)8/19/1999 10:03:00 PM
From: Time Traveler  Read Replies (3) of 41369
 
>>Zeroing in on the MaxPain Point<<

Steve,

In my opinion, you have just mentioned the answer to this age-old question.

>>”Volume in AOL was very low and significantly so, a standard deviation below the volume of the past month.”<<

When the volume is low, buy-on-the-market can walk up the price by paying the ask price with relatively little amount of capital. Consequently, sell-on-the-market can pull down the price by selling at the bid price with relatively little capital.

When the volume is high, you hardly ever see a stock closing at the around the MaxPain point. The big run-up of these internut stocks during inflation stage rarely closed at the MaxPain point because of high volume.

This suggests to me a manipulation by some one, probably not by the specialists as you suggested but some one bigger. I also want to point out that this MaxPain point varies depending on what strike price, whether calls or puts, that you have included in your calculation.
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