New ‘corporate action’ contracts that enable trading on the earnings per share (EPS) of major corporations correctly gave traders an opportunity to predict today’s earning miss by Google, the HedgeStreet Exchange reports.
The new EPS contracts traded on HedgeStreet, the first Internet-based, government regulated exchange where traders can hedge against or speculate on economic events, indicate the market’s sentiment on outcome of quarterly EPS results.
Although the EPS contracts on HedgeStreet are new instrument offerings, early indications are that the EPS contracts will continue to reflect market sentiment to a greater and greater degree as market participation increases within these unique listings. More EPS contracts, based on the earnings for additional firms, will be listed in the future.
“HedgeStreet’s EPS contracts are designed for investment professionals and traders who have or wish to gain exposure to the risks associated with the earnings announcements of large corporations,” says Russell Andersson, Vice President of Instrument Origination and a co-founder of the HedgeStreet Exchange. “Previously their only means of action was to buy or sell the stock. With EPS contracts they can custom tailor their risk or profit expectations, and their interest in these products is growing.”