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Strategies & Market Trends : Ask Vendit Off-Topic Questions
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To: Vendit™ who wrote (5825)3/6/2005 12:01:17 PM
From: CapitalistHogg™  Read Replies (1) of 8752
 
In retrospect something fundamental such as news must have happened to affect AMLN negatively this week because the stock did not perform as the chart predicted that it should.

I am a big fan of TA and agree with you that something negative must have influenced the behavior of AMLN's price. TA, I have learned, is very useful under the right conditions.

AMLN popped up on my radar screen in which I scan for event based trades. I use an algorithm that I developed that compares Black-Scholes Implied Volatility to Historical Volatility and measure it against time. It basically tells me how closely the stock price is correlating with an unknown future event or basic market fundamentals. Once I determine the stock is correlating with a news event I start investigating what the potential news story might be. Part of my research includes scanning the message boards which is how I came across your comments.

IMHO AMLN's stock is currently a "wag the dog" scenario in which the derivatives are controlling the price. It is imperative to check the outstanding option open interest for clues about bias and the potential news story in this case Phase III FDA approval of Symlin.

I probably will get out of this trade due to no clear bias in the option open interest and recent TA activity.

Thanks for your comments.
bighogg
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