Essentially it suggests one takes the risky approach of taking a position in a stock on the strength of a rumour or scuttlebutt making the rounds of the dealing rooms or punters' chat sites.
One then sells the stock as soon as the impending announcement becomes public. Providing there was an announcement in the first place. If not, you've just cleared the position of an unscrupulous trader. There lies the inherent and significant risk.
Advanced Energy Services hit a low of 14 cents on the 7th of this month, upon which it did an about face and reached a high of 23.5c three days ago.
On Monday, AES released news of a new product line which has already achieved nearly $1 million in a $2 million sales projection. In the same release was news of an asset sale bringing in $2.5 million.
Yesterday the stock opened at 23c, dropping to 20c at the end of trade.
