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Calendar effect |
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Calendar effectDescribes the tendency of stocks to perform differently at different times, including performance anomalies like the January effect, month-of-the-year effect, day-of-the-week effect, and holiday effect.Calendar effectThe theory that certain days of the week, weeks of the month, and months of the year are more likely to produce rises/falls in share prices than others. 'Sell in May and go away' is an example.David Schwartz, a stock market commentator who has analysed stock prices since the First World War, argues that 'pockets of predictability' can be identified and used to predict future prices. Among his observations:6th June is the best trading day of the year. Prices rise 77% of the time. At the bottom of the rung lies 26th September which rises just 28% of the time over the long run.Prices have fallen in eight of the last 10 years during the last week of October.The UK stock market usually rises in January in US presidential election years.Since 1925, small February price shifts were followed with a rally in the next eight months in 27 out of 30 times.Similar MatchesTotal return for calendar yearTotal return for calendar yearThe profit or loss realized by an investment at the end of a specified calendar year, stated as the percentage gained or lost per dollar invested on January 1. Shadow calendarShadow calendarA backlog of securities issues registered with the SEC, awaiting the determination of an offer date. Ratio Calendar SpreadRatio Calendar SpreadSelling more near-term options than longer-term ones purchased, all with the same strike; either puts or calls. Ratio Calendar CombinationRatio Calendar CombinationA strategy consisting of a simultaneous position of a ratio calendar spread using "calls" and a similar position using puts, where the striking price of the "calls" is greater that the striking price of the "puts". Calendar spreadCalendar spreadThe sale (purchase) of a near month call option (put option) and the simultaneous purchase (sale) of a longer dated call option (put option) at the same exercise price. Further SuggestionsCalendar Straddle or CombinationCalendar Calendar spread |
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