"According to folklore, greed and fear drive financial markets. But this is only partly correct. While fear does play a role, most investors react less to greed and more to hope. - Hersh Shefrin, author: Beyond Greed and Fear "
Trading Options using ABC Patterns
Here is an example of how ABC Patterns can be viewed on Options Charts. Baxter International (BAX) was showing an interesting ABC Bullish pattern as the price emerged from a low of $45 to $62 forming an ABC Bullish Pattern. From late October, the pattern was setting up to rise with Entry Level of $54.85. At the entry level, the target was 100AB at $67. Time wise, 100AB was marked for at 65 calls is Feb. 17th, 2010.
The BAX Feb. 65 Calls were priced between 10c to 15c. Current BAX BM also has an ABC Bullish pattern with Price targets of 100 AB at 0.60c, and 1.62AB at 0.90c. Current BAX BM price is at 0.50c.
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