The Information Content of Implied Skewness and Kurtosis Changes Prior to Earnings Announcements for Stock and Option Returns

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CFA Digest
August 2012
Source: CFA Institute
Dean Diavatopoulos James S. Doran Andy Fodor David R. Peterson
Priyanka Shukla, CFA (Reviewer)

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Abstract

To determine whether earnings information is reflected in option prices before the actual earnings announcement, the authors examine higher-order moments of stock returns. They suggest that the results of their study offer profitable strategies for both stock and option portfolios.

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Topics
Derivatives
    :
  • Options Markets and Instruments
|
Equity Investments
    :
  • Fundamental Analysis (Sector, Industry, Company) and the Valuation of Individual Equity Securities
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