Weekend effect Research

This is what has led to the stock prices falling on Mondays and rising on Fridays. (Jones and Shemesh, 2018) Options returns tend to be lower during the non-trading like during the weekends. There is a further explanation that has it that returns that come up as a result of nontrading which occur during the weekends can’t be explained by risk. They can only be explained by the mispricing that comes up as a result of improper treatment of stock returns during the closing of the markets. Effect thus implies that any kind of research that is finance related should that involves pricing should take intro consideration nontrading periods which are the weekends. (Bogdan, Hesse and Treleaven, 2018) So as to have an understanding of factors that do affect the volumes being traded on in a single market.

It could be in best interest if there is a review which is conducted by finance research experts like the calendar anomalies on the price returns. Also, a consideration has to be put on the effects of the calendar anomalies on the volumes which are being traded on. Focus and emphasis has to be put on week day trades which can really play a great role in the formulation of several hypothesis which can help in a great deal. Majority of the researchers are tend to be surprised when they discover that how stocks are distributed does depend upon days of the week. (Bollerslev and Hao Zhou, 2009) Study investigations also indicate that Monday negative return has a great effect on the stock return too.

From examining of the past periods its evident that the extra stocks from the companies that are small and even the ones which are being traded over the counter can have a great impact on stocks. From all the scenarios that have been covered its clear that the weekend effect is so strong and has an impact on trading of stock and volumes of trade too. Studies go an extra mile to explain the effects of the study but not all give clear explanations that concern weekend effect. First part does have a representation of history that explains the weekend effect better since the start of 1928 up to the year of 1982 that is based on Standard index and also Poor’s composite index.

One is prone to get more losses if he leaves his positions on during the weekend. If he losses on all the trades and the positions are still on he will be having a high leverage which will lead to the company closing the positions on behalf of him in order to stop him from losing more money on the open trades. Weekend effect has been known all over the world by majority of the forex and binary traders. In the U. S majority of the indices have been on the reverse starting from the year of 1980 to 1990. , Tim Bollerslev, Frank X. Diebold, and Heiko Ebens, 2001, The distribution of realized stock return volatility, Journal of Financial Economics 61 Bakshi, Gurdip, Charles Cao, and Zhiwu Chen, 2015, Option pricing and hedging performance under stochastic volatility and stochastic interest rates, Handbook of Financial Econometrics and Statistics Bogdan Batrinca, Christian W, Hesse and Philip C, Treleaven, Examining drivers of trading volume in European Markets, International Journal of Finance and Economics,23,1, (134-154), (2018) Bollerslev, Tim, George Tauchen, and Hao Zhou, 2009, Expected stock returns and variance risk premia, Review of Financial Studies 21, 4363-4392.