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If there is a big price move before an important event such as earnings report etc., should I take this into consideration because it might be leaked news?

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I wouldn't use it to base any decisions on, it could be a result of many factors, none being a leak. Consider for a minute what size a leak you would need to actually move price in whatever instrument your looking at, that may help you put it into context.

If it moves down a few days leading into an ER, it could just be uncertainty or a bit of panic, which a positive ER can quickly erase.

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I knew someone who had the inside track on the spin off date that had been speculated about for many years. It was anticipated to be a good news event. Option and stock volume increased steadily for a few days. He loaded up on expensive calls (option premium expands when there is increased buying). When the news hit, there was no reaction at all. Option premium contracted immediately and the loss was baked in. OTOH, had the stock gapped up, he would have had a tidy pay out.

The short answer is that you should take everything into consideration. The real question is whether the price move before the news presages further move or the news is out and the move is over? There's no way to know that.

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  • To Bob's point, if you are concerned about that sort of information, you can also look at the insiders' buying and selling activity leading up to the earnings date. Usually when insiders are dumping their positions en masse, this is not a good sign. But as Bob said, you need to take everything into consideration. – HK47 Jul 31 '18 at 15:02

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