Event Driven Trading

Use the LSE RNS calendar and Investegate for results and AGMs, the Bank of England website for MPC dates, company investor-relations pages for guidance, and the ONS calendar plus portals like Investing.com for economic events. Build your own watchlist of shares and track their event calendars weekly.

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 as you see the actual outcome first. Many traders combine both - position before with part of capital, then adjust after based on the outcome.

Shares are priced on expectations, not absolute results. If the market expected 20% growth and actual was 15%, the share 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 events, IV crush works against you even if the share moves in your direction. Consider spreads to reduce IV exposure.

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 is important.

Check: (1) options IV - high IV suggests uncertainty; (2) pre-event price drift - has the share already moved toward the expected outcome? (3) options positioning - heavy call or put buying suggests a direction 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. Iron flies/condors profit if the share stays flat but lose on large moves. Calendar spreads can profit from the IV differential regardless of direction. Your choice depends on whether you expect a large move - and note single-stock options are monthly/thin, so FTSE index options or CFDs may be more practical.

For announced deals: merger arbitrage - buy the target at a discount to the offer and capture the spread as the deal closes (cash deals need no hedge; share deals need a short in the bidder via CFD). The UK Takeover Code governs the process (Takeover Panel, 30% mandatory bid, scheme vs offer, CMA clearance). Post-announcement, bidders often dip initially.

Yes. Macro events affect many shares/sectors, so use FTSE 100 futures/options or sector ETFs rather than single shares (note the UK has no liquid retail bank-sector index future, so banks are traded individually or via the FTSE 100). The impact is usually smaller per share but more systematic. Consider sector rotation (long beneficiaries, short losers) for balanced exposure.

Build an event portfolio: a maximum of 8-10 positions, no more than 3 in the same sector, no more than 2 in the same week. Track correlations - technology results in the same week are correlated. Allocate capital by conviction score. Keep a cash buffer for post-event opportunities. Review weekly.

Collect historical event data (outcome, surprise, price reaction). Compute simple statistics - average move by event type, win rates, and an auditable ordinary-least-squares regression of the move on the surprise and a few public features (guidance change, pre-event momentum, IV percentile, sector context). Inspect the coefficients yourself and use out-of-sample periods to avoid look-ahead bias. Keep it transparent and rule-based - not a black-box or automated screen.

Depends on the sector and must be genuinely public. For retail: published web-traffic estimates, public app-store rankings, trade-body sales indices. For industrials: published shipping and commodity data. Start free: Google Trends, public sentiment, official statistics (ONS). Treat all of it as supplementary context, never material non-public information (UK MAR), and always sense-check it against fundamentals before trading.

Before events the term structure often inverts (near IV > far IV). Trade calendar spreads: sell the near expiry (high IV), buy a later expiry (lower IV). Profit from the differential crush when the near IV drops more. Risk: large moves can overwhelm the IV gain. Size conservatively and watch gamma. FTSE 100 index options are the liquid venue for this.

For market risk: FTSE index puts proportional to long exposure. For sector concentration: sector ETF shorts or puts. For a volatility spike: index option hedges (the US VIX/European VSTOXX are the broad volatility gauges, as the UK lacks a widely-followed volatility index). Hedge dynamically as events resolve and new positions enter. Hedging costs money - only hedge material risks.

Use public information to inform conviction, not to replace analysis and never to obtain non-public information. Process: (1) traditional analysis sets the base case; (2) public sources provide confirming/conflicting context; (3) adjust conviction based on alignment; (4) size by combined confidence. Document which public signals were useful. This is manual research context - not an AI/ML screen or an automated system, and it must comply with UK MAR.