Part IV: Implementation: Options Trading Strategies
Part III presented evidence of how the market reacts to earnings announcements and earnings surprises. We discussed how large these market reactions are compared to typical trading days, and we also showed how a surprisingly large portion of these market reactions are in the opposite direction of the earnings surprise. Part IV discusses several different ways to extract gains from options-based trading strategies that exploit these empirical regularities. Our goal is to tailor these strategies to fit into your arsenal of how to exploit these short-term trading windows targeted around companies’ earnings announcements.
Chapter 7 describes the unique characteristics of companies that have listed ...
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