News & Events

New Research: Can Options Predict Future Stock Performance?

October 8, 2021

“We find that the expensiveness of OTM calls relative to OTM puts, reflected in the positive RNS of the option-implied stock return distribution, can, in fact, reveal positive information for the future stock price, i.e., it predicts stock outperformance. We also offer a trading mechanism for why this is the case and present other factors that when used with RNS can help to identify future positive stock performance.”

Fintech Zoom’s latest article discusses if options prices can predict future stocks’ returns by taking a deeper look into the research paper, “Positive Stock Information in Out-of-the-Money Option Prices,” by K. Gkionisa, A. Kostakis, P. Stilgerg, and G. Skiadopoulos. Featuring OptionMetrics’ data, read the full article below to learn more.