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Opening a position on the day of the earnings announcement is generally a bad idea regardless of whether you’re right or wrong about the direction. Volatility i
by throwawaymath 8y ago
Opening a position on the day of the earnings announcement is generally a bad idea regardless of whether you’re right or wrong about the direction. Volatility is effectively priced in at that point.
- hueving 8y agoYou're thinking of options, not stock. Stock price itself can't imply volatility, it can only reflect market expectations of earnings.
- deleted 8y ago[deleted]
- throwawaymath 8y agoWhile implied volatility is a feature of derivatives (and by extension, options), the price of an equity does undergo volatility, particularly from the heightened trading activity in anticipation of e.g. earnings. Volatility is not restricted to the definition of implied volatility.
- scurvy 8y agoYou're confusing stock with options.
- throwawaymath 8y agoNo, I'm not. I'm not talking about implied volatility. I'm talking about the way in which the stock price significantly changes in anticipation of the earnings announcement. Volatility is a formal variable for derivatives, but that doesn't mean equities (and the broader market) do not also experience volatility.