Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: William H Huebl who started this subject	4/14/2003 1:10:29 PM
From: Real Man	Read Replies (2) of 94695

Interesting, 42% of volume is program trading. All these bets are placed according to one rule - Black-Scholes with minor corrections (reverse to the mean, something like "max pain"). I think we will see more and more failures of this rule, because when it fails, every program trader starts to liquidate their derivatives positions. We have seen max pain fail in March, maybe it will happen this week again? All this is not very good, it indicates that traders (a.k.a. hedge funds) must be wiped out. What next? Guess what happens when everyone on the Street program trades according to the same set of rules? financialsense.com

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