PAL ran up from $3.45 to $3.85 during the week, the max pain theory got the direction right at least...
maxpi: The outstanding PAL put options that's in the money stayed until the last day. So the maximum pain theory should take effect on Friday because they all get exercised on the last day. But it did not happen. I suspect there is illegal naked short selling going on. I checked, PAL was added to the naked short sell threshold list on Dec. 19, 2007, and still stay there: http://www.amex.com/amextrader/tradingData/data/RegSHO/daily/AMEXth20071219.txt A security is added to SEC's SHO threshold list when in each of the prior 5 trade days, a total of more than 0.5% of all common shares failed to deliver. That means for Dec. 12,13, 14, 17, 18, for each of those settlement days, 0.5% of PAL, almost 0.4M shares each day, failed to deliver. The corresponding trade days would be Dec. 10, 11, 12, 13, 14. A week of extremely heavy trade volume, probably high volume due to rampant naked sells to drive down price. What would be the implication, if currently that probably naked sells are the only dorminate sellers in PAL. A short squeeze any time soon? Please discuss your opinion.