Todays open and the weekend risk premium

Discussion in 'Trading' started by Asparagus, Jan 7, 2008.

  1. Sometimes I think about a 'weekend risk premium' - all those who sell out on friday for fear of an adverse event over the weekend getting back in on monday morning creates a reward for weekend risk takers. in light of the giant move on friday, it doesn't look like much of a premium is being paid this morning.....are folks simply not willing to buy back in? just some food for thought...
  2. Weekend risk premium? LOL. How about an intraday risk premium for holding such overpriced junk during trading hours when moves are biggest?
  3. MGJ


    Perhaps TANSTAAFL explains this. Perhaps shrewd and savvy traders noticed the weekend risk premium quite some time ago. Perhaps they position themselves to profit from the weekend risk premium, buying the at the close on Friday and exiting at the open on Monday. Perhaps a large number of them do this, risking so much aggregate capital on the trade, that they bid up the price on Friday's close and offer down the price on Monday's open, to the point where the (reward/risk) ratio of the play is greatly diminished. Sure, some weeks it yields big profits, but other weeks it loses big too, and on balance perhaps it's not much better (reward/risk) ratio than lots of other plays.

    There Aint No Such Thing As A Free Lunch = TANSTAAFL