• Skip to main content
  • Skip to footer

OptionMetrics

search
  • About Us
    • Who We Serve
    • Why OptionMetrics
    • Leadership
  • Data Products
    • Equities
      • United States
      • United States Intraday
      • Europe
      • Asia
      • Canada
      • ETFs
    • Futures
    • Signed Volume
    • Implied Beta
    • Dividend
      • Implied Dividend
      • Woodseer Dividend Forecasting
  • Research
  • Blog
  • News & Events
  • Careers
  • Contact

S. P. Clark, Y. (Jacques) Lu, and W. Tian: Extracting Forward Equity Return Expectations Using Derivatives

February 2, 2026

This paper develops a framework for extracting conditional expectations of future equity returns from derivative prices. We show that expected returns can be identified not only at the spot horizon, but also for forward-starting investment periods, yielding the full surface of expected future returns. Using index options, we derive theoretical bounds on future returns, and using VIX derivatives, we link risk-neutral and real-world expectations. Empirically, derivative-implied expectations exhibit sharp shifts around major crises, reveal persistent negative dependence between adjacent monthly returns, and generate economically valuable reversal signals. These findings uncover new dimensions of return predictability embedded in derivatives markets.

Download

Share this post:
  • Facebook
  • Pinterest
  • Twitter
  • Linkedin
OptionMetrics Logo
  • About Us
  • Who We Serve
  • Why OptionMetrics
  • Leadership
  • Data Products
  • Equities
  • Futures
  • Signed Volume
  • Implied Beta
  • Dividend
  • Research
  • Blog
  • News & Events
  • Careers
  • Contact Us
  • Support Request
Stay Connected

dashicons-linkedin dashicons-twitter dashicons-facebook-alt

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply

© 2026 OptionMetrics, LLC. All Rights Reserved. | Privacy Policy | Terms of Use | Accessibility | Site Map