- Hardcover: 224 pages
- Publisher: FT Press; 1 edition (March 19, 2011)
- Language: English
- ISBN-10: 0137084927
- ISBN-13: 978-0137084920
- Product Dimensions: 5.8 x 0.8 x 8.3 inches
- Shipping Weight: 12 ounces
- Average Customer Review: 26 customer reviews
- Amazon Best Sellers Rank: #657,723 in Books (See Top 100 in Books)
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Trading on Corporate Earnings News: Profiting from Targeted, Short-Term Options Positions Hardcover – March 19, 2011
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From the Back Cover
“Trading on Corporate Earnings News is one of those rare, high-quality pieces of work that is destined to become an instant source of value creation for serious investors. Its greatest strength lies in linking actual statistics to market behavior and fundamental analysis. Serious investors who study the material will undoubtedly discover its value as a springboard for further analysis. That said, nobody interested in structuring option trades around corporate events such as earnings should be without this book. John Shon and Ping Zhou must be commended for creating a study of this caliber.”
–Jeff Augen, author, Trading Options at Expiration and Day Trading Options
“John Shon and Ping Zhou have transformed two dry subjects–earnings announcements and options trading–into a dynamic, interesting, well documented, and highly readable book. Anyone wanting to improve their trade timing will need to read this book. It is an excellent addition to the options trading literature.”
–Michael C. Thomsett, author, Options Trading for the Conservative Investor
“John Shon and Ping Zhou have written the ultimate recipe book for trading earnings news with options. They cover the theory and evidence of earnings announcements and market reactions, and describe in great detail the implementation of option trading strategies that exploit these findings. Trading on Corporate Earnings News demonstrates that rigorous statistical, economic, and financial analysis can lead to profitable investments. I recommend this book as an excellent reference for all investors interested in improving their option trading skills using earnings news and for all readers curious about the fascinating field of accounting and finance.”
–Minh Trinh, CFA, PhD, Managing Principal, Referee Advisors LLC
“John Shon and Ping Zhou have created a masterpiece based on clear and penetrating observations on stock price volatility. Their discovery that options-based trading around earnings announcements yields better returns, backed by their research and undeniable evidence, is groundbreaking. Written in simple and plain language, it is appropriate for the pro and novice alike. If you trade–or want to know how to trade options–you need to buy this book.”
–John Reilly, Managing Partner, Alliance Capital Partners
Trading on Corporate Earnings News shows how to earn large, quick profits by taking targeted, short-term options positions timed explicitly to exploit companies’ quarterly earnings announcements.
The authors begin by presenting new findings from cutting-edge studies on market reactions to quarterly earnings news and surprises. Drawing on enormous data sets, they identify the types of earnings announcement trades that are most likely to yield profits, based on the predictable impact of several key variables. Next, they provide real examples of individual stocks–and, in some cases, conduct large sample tests–to help investors profit from these regularities. Finally, they show how to manage crucial nuances and pitfalls that can powerfully impact performance.
Designed for every investor or trader, Trading on Corporate Earnings News brings together everything you need: strong underlying theory, rigorous empirical research, actionable strategies, and real-world, plain-English execution techniques.
Equity and options behavior around earnings announcements
How stocks and options really move before and after earnings news
Surprising reactions to earnings surprises
Why markets often don’t react the way you expect–and what to do about it
Improving your odds on every trade
Practical issues, proven theories, and unexpected empirical regularities
Beyond options: powerful ideas for stock-based investing
Gain deep market insights that you can apply in every investment
About 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.
Top customer reviews
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The only reason I did not give a 5th star is due to their presenting a very short-term strategy without presenting intra-day data to further refine it. In this way, I found it typical of an academic work where the data is excellent but short on real-time experience. I have been market-making and daytrading for 20+years now and have seen many strategies tested only on daily data that fall apart when intra-day movements and bid/ask spreads are taken into account.
Overall, Trading on Corporate Earnings News is written in a clear, concise, straight forward style that is easy to follow. Numerous examples are given to support the underlying theme of this book. For anyone trying to work through the earnings maze, I highly recommend this interesting, enjoyable book.
The authors have also done research on timing these trades, showing that generally the most successful trades were entered the day before the earnings announcement, and exited typically by the day after. They show that even entering the trade 2-3 days early can adversely affect the final tally of profits. This was the main point of their work.
In reading this book, there were a few downsides that left me somewhat disappointed. The first chapters of "Trading on Corporate Earnings" spend entirely too much time on the basics of finance, the stock market, and options trading. I felt that a portion of this section served no other purpose than as filler. In my opinion, if a reader learns a great deal from these first chapters on what I consider basic finance and basic trading, then they likely are not ready for the trading techniques discussed in the later chapters.
The second point, and this is not emphasized enough, is that these sophisticated trades are based on first defining likely candidates for large earnings surprises, either up or down. Isn't this the basis for most options traders' activities? Attempting to identify companies with large growth or shortfall opportunities? Admittedly, the authors present an interesting and effective trading technique to capture short-term option profits under these conditions, but their technique is profitable only after the candidates have been identified.
Finally, and this is just a personal experience. As an active, albeit small, options trader, I did learn and embrace several new ideas from this book. Although I often trade with earnings announcement schedules in mind, the points made in this book about entering the trades one day prior to the announcement, bore out when I looked back over my recent trading history. So the first trade for me under this system was going to be in HPQ, in its most recent quarter. I had already scoped out the straddle I planned, the strike price, and the bid and ask prices. Earnings were to be announced on Wednesday, I looked at entering the trade on the previous Friday, but held off. I was going to do the right thing. Unfortunately for me, HPQ, because of a memo leak, announced their earnings a day early, the market didn't like the numbers and skewered the stock, and I lost out on a profitable trade. Lesson learned, perhaps entering the trade a day or two earlier is worth the minor reduction in profit.
Most recent customer reviews
It's very difficult to predict earnings, and even if you could, its just as difficult to predict...Read more