Event Driven Trading

Use the ASX Market Announcements Platform for results and corporate actions, company investor-relations pages for results dates and AGMs, the RBA website for the Monetary Policy Board schedule, the ABS for CPI and jobs data, and financial portals (Market Index, the Motley Fool reporting calendar, Investing.com) for economic events. Build a watchlist and track event calendars weekly. Remember Australia reports semi-annually, so the big clusters are February and August.

It depends on your conviction and risk tolerance. Pre-event trading offers higher reward but requires conviction about the outcome. Post-event trading is lower risk because you see the actual outcome first - and in Australia results usually arrive as an opening gap (released pre-open or under a halt), so the reaction is visible at the 10:00am open. Many traders combine both: position before with part of the capital, adjust after based on the outcome.

Stocks are priced on expectations, not absolute results. If the market expected 20% growth and actual was 15%, the stock may fall even though 15% growth is objectively good. The 'surprise' (actual vs expected) determines the move, not whether the news is good or bad in isolation.

IV (Implied Volatility) rises before events due to uncertainty and 'crushes' (drops sharply) after the event when uncertainty resolves. If you buy options before an event, IV crush works against you even if the stock moves your way. Consider spreads to reduce IV exposure. ASX equity ETOs are American-style and cover 100 shares.

Generally 1-3% of capital per event trade, with 1-2% for high-impact binary events like results. Maximum total event exposure should be about 15% of capital across all positions. Event trades have higher variance, so conservative sizing matters - and remember gap and trading-halt risk can prevent a clean exit.

Check: (1) Options IV - high IV signals uncertainty; (2) Pre-event price drift - has the stock already moved toward the expected outcome? (3) Options positioning and short interest - heavy call/put buying or short-covering suggests a consensus; (4) Analyst revisions - recent upgrades/downgrades. If all point one way, the event may be priced in.

Straddles/strangles profit from large moves either way but are expensive due to elevated IV - and for low-volatility large caps like the banks they often lose to IV crush. Iron flies/condors profit if the stock stays flat but lose on a large move. Calendar spreads can profit from the IV differential regardless of direction. Your choice depends on whether you expect a large move.

For announced deals: merger arbitrage - buy the target at a discount to the offer and capture the spread as the deal closes, but price in the scheme vote (75%/50%), court approval and ACCC/FIRB. For M&A speculation: watch for unusual options activity, substantial-holding notices (the 5% disclosure threshold), and industry consolidation. Post-announcement: the target is usually halted first, and acquirers often dip.

Yes. Macro events affect multiple stocks/sectors, so use SPI 200 index futures/options or sector ETFs rather than single stocks. The per-stock impact is smaller but more systematic (a dovish RBA tends to lift banks and REITs). Consider sector rotation - long beneficiaries, short losers - for balanced exposure. Watch the 2:30pm AEST decision and the 3:30pm press conference, not just the headline.

Build an event portfolio: maximum 8-10 positions, no more than 3 in the same sector, no more than 2 in the same week (hard during the August cluster). Track correlations - bank results in one week are correlated, and miners move together on iron ore. Allocate by conviction score, keep a cash buffer for post-event opportunities, and review weekly.

Collect historical event data (outcome, surprise, price reaction). Engineer features: surprise magnitude, guidance change, pre-event momentum, IV percentile, short interest, sector context, and A-VIX level. Train a regression (predict return) or classifier (predict direction). Use walk-forward validation. Key: avoid look-ahead bias - and note Australia's semi-annual reporting means fewer data points per stock than a quarterly market.

It depends on the sector. Retail: card data, web traffic, app downloads (e.g., a jewellery retailer's store rollout). Tech: app rankings, developer activity. Resources (very Australian): satellite imagery of mines and ports, and bulk-commodity vessel tracking out of Port Hedland. Start free: Google Trends, X sentiment, job postings. Paid: Sensor Tower, SimilarWeb, vessel-tracking feeds. Always backtest before trading.

Before events the term structure often inverts (near IV > far IV). Trade calendar spreads: sell the near-term series spanning the event (high IV), buy a further-dated series (lower IV). Profit from the differential crush when the near-term IV drops more. Risk: a large move can overwhelm the IV gain. Size conservatively and watch gamma - and remember single-stock ETO liquidity is concentrated in the larger names.

For market risk: SPI 200 / XJO index puts proportional to your long exposure. For sector concentration: a basket short or sector-ETF puts (e.g., across miners if you're commodity-heavy). For volatility: index options, since A-VIX isn't separately tradeable at retail. Hedge dynamically as events resolve and new positions enter. Cost-benefit: hedging costs money - only hedge material risks.

Use alternative data to inform conviction, not replace analysis. Process: (1) traditional analysis sets the base case; (2) alternative data provides confirming or conflicting signals; (3) adjust conviction based on alignment; (4) size on the combined confidence. Document which signals proved useful for ongoing refinement - and stay clear of material non-public information and continuous-disclosure boundaries.