John,
Thanks, you initiated very interesting discussion. May be more important, it demonstrated that SI is not completely dead, pleasant news.
Ratio of two ways, shorting+conversion+covering/conversion+selling seems to be hard to predict (did anyone try?). TA may help but at this point I do not see any reason to spend time. After I found convertibles deal and then additional convertables in the text I lost any interest to ARIA as a long, and there was no way I could go short. The only reason to follow is to understand this obscure story: why the company with one of the best science in the field, with very good relations with top sci executives, and highly respected by biotech analysts for their science and patents, decided to go into such deal. Another interesting detail, already mentioned by Peter, is extreme complexity of the deal for 5 M. If it's complicated for me, it doesn't really matter, but given Peter's background...
It may go below 1$, delisting is long process, so BB risk is relatively distant. There are also recent examples of the "last minute" deals to avoid delisting. As you can imagine, investors are in panic after NASD notification and ... price may go even lower.
Regarding argument of your opponents that institutions will NOT short... Can anyone explain WHY NOT?
My decision last year, after reading some details, was very simple: do nothing until significant insider buying or any significant new piece of info.
Have a nice evening.
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