Chelsea Therapeutics Rally — Speculation or Desperation?

Note that the article’s writer does own shares of Chelsea Therapeutics. That always makes for an interesting argument, even when you disclose that you are in fact talking up your book.

Chelsea shares are up almost 9% at $2.01 so far this morning. However, this is a mere $134 million company by market cap. The 52-week trading range is $0.70 to $4.21, and shares have traded all over the place, from $1.50 to about $7 since 2005. Nearly 4 million shares have traded hands today, versus an average daily volume of just under 1.5 million shares, so this is already within striking distance of a 200% alert above normal daily trading volume.

This stock does trade stock options, but the open interest is rather thin for the April, May and June expirations. At $2.00, some traders would argue that the stock is already trading like an option.

Chelsea is one of those companies that should be called unsuitable for widows and orphans.

Contact [email protected] for any questions or corrections.