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Trading on Corporate Earnings News: Profiting from Targeted, Short-Term Options Positions [NOOK Book]

Overview

Profit from earnings announcements, by taking targeted, short-term option positions explicitly timed to exploit them! Based on rigorous research and huge data sets, this book identifies the specific earnings-announcement trades most likely to yield profits, and teaches how to make these trades—in plain English, with real examples!

Trading on Corporate Earnings News is the first practical, hands-on guide to profiting from earnings announcements. Writing for investors and traders ...

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Trading on Corporate Earnings News: Profiting from Targeted, Short-Term Options Positions

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Overview

Profit from earnings announcements, by taking targeted, short-term option positions explicitly timed to exploit them! Based on rigorous research and huge data sets, this book identifies the specific earnings-announcement trades most likely to yield profits, and teaches how to make these trades—in plain English, with real examples!

Trading on Corporate Earnings News is the first practical, hands-on guide to profiting from earnings announcements. Writing for investors and traders at all experience levels, the authors show how to take targeted, short-term option positions that are explicitly timed to exploit the information in companies’ quarterly earnings announcements. They first present powerful findings of cutting-edge studies that have examined market reactions to quarterly earnings announcements, regularities of earnings surprises, and option trading around corporate events. Drawing on enormous data sets, they identify the types of earnings-announcement trades most likely to yield profits, based on the predictable impacts of variables such as firm size, visibility, past performance, analyst coverage, forecast dispersion, volatility, and the impact of restructurings and acquisitions. Next, they provide real examples of individual stocks–and, in some cases, conduct large sample tests–to guide investors in taking advantage of these documented regularities. Finally, they discuss crucial nuances and pitfalls that can powerfully impact performance.

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Product Details

  • ISBN-13: 9780132615853
  • Publisher: Pearson Education
  • Publication date: 3/23/2011
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 176
  • File size: 3 MB

Meet the Author

John Shon is Professor of Accounting at Fordham University’s Gabelli School of Business and Graduate School of Business Administration. He has received several teaching awards throughout his teaching career. Shon publishes extensively in academic journals and has received several grants and awards for his research on equity markets. He holds a Ph.D. in Accounting and an MBA in Finance from the University of Chicago’s Booth School of Business.

Ping Zhou, Portfolio Manager and Senior Vice President of the Quantitative Investment Group at Neuberger Berman, currently manages U.S. and global equity funds for institutional investors. Zhou’s expertise is in portfolio theory, market anomalies, investor behavior, corporate finance, and risk management. He previously served as Accounting Professor at City University of New York—Baruch College. He holds a Ph.D. in Accounting from Georgia State University.

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Table of Contents

Acknowledgments xii

About the Authors xiii

Preface xiv

P ART I: I NTRODUCTION

Chapter 1: Introduction 3

P ART II: T HEORY : E ARNINGS A NNOUNCEMENTS AND E ARNINGS S URPRISES

Chapter 2: Earnings Announcements: Why Are They So Important? 13

Chapter 3: Earnings Surprises: Definition and Measurement 23

Chapter 4: Earnings Surprises: Empirical Evidence 39

PART III: E VIDENCE : M ARKET R EACTIONS

Chapter 5: Market Reactions to Earnings Announcements 49

Chapter 6: Market Reactions to Earnings Surprises (Are Full of Surprises) 57

PART IV: I MPLEMENTATION : O PTIONS T RADING S TRATEGIES

Chapter 7: General Characteristics of Optioned Companies and Options Behavior Around Earnings Announcements 71

Chapter 8: Practical Considerations Before Implementing Trades 77

Chapter 9: Directional Bets: Long Calls, Bull Call Spreads, Long Puts, and Bear Put Spreads 97

Chapter 10: Long Straddle and Strangle Strategies 111

Chapter 11: Short Straddle and Strangle Strategies 135

PART V: F INE T UNING : I MPROVING THE O DDS OF A P ROFITABLE T RADE

Chapter 12: Growth Expectations and the Torpedo Effect 153

Chapter 13: Revenue and Expense Surprises 161

Chapter 14: Earnings Surprise Persistence 167

Chapter 15: Other Theories and Evidence 175

References 189

Index 197

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