Friday, August 15, 2008


I read a snippet about the benefits of being contrarian when it comes to put call ratios. If it leans in the put direction, expect the stock to rise. If it leans in the call direction, expect the opposite. I've added the maxpain calculator link to the side, which helps determine where most institutions would benefit from the put and calls they have written. From what I have heard, and the little I have seen, stocks tend to move towards the Max Pain area. In any case, Max Pain for AnF is around 52.50 (it closed near there) and the put/call ratio is extremely low, meaning there are far more calls than puts. Because of that, hedge funds may push it down (there was a lot of decline on low volume). However, I think the stock is severely oversold on the weekly chart. I'm looking for a rebound. But I also have my stops in.

Update: $60 maxpain for November. Can't get October to work. 52.50 for Sept. Still believing there will be a run up before then. As always, prepare for different scenarios.

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