Understand news events and their impact — Hinglish notes

4.4.7 · Stock-Market › When to Trade — Timing & Sessions

News event KYA hota hai?

Price surprise par react kyun karta hai, number par nahi?

Reaction ko first principles se derive karna

Maano current price $P_{0}$ kisi future cashflow driver $X$ ki market ki expected value ko embed karti hai:

$P_{0} = f (E [X])$

jahan $E [X]$ consensus expectation hai. Jab actual $X_{a}$ aata hai, price update hoti hai:

$P_{1} = f (X_{a})$

$f$ ko $E [X]$ ke around first order (Taylor) mein expand karo:

$P_{1} \approx f (E [X]) + f^{'} (E [X]) (X_{a} - E [X])$

$P_{0} = f (E [X])$ subtract karo:

$Δ P = P_{1} - P_{0} \approx f^{'} (E [X]) \cdot surprise (X_{a} - E [X])$

Ek scheduled event ke around volatility ka behavior

Release se pehle, $X_{a}$ ke baare mein uncertainty zyada hoti hai, isliye option prices (implied volatility) inflate hote hain. Jis moment number print hota hai, uncertainty collapse ho jaati hai.

Figure — Understand news events and their impact

Worked Examples

Forecast-then-Verify drill

Common Mistakes (Steel-man + Fix)

Flashcards

News release par price actually kya move karta hai — number ya surprise?

Surprise:

Actual - Consensus

"Priced in" define karo.

Market ki expectation already current price mein reflect hoti hai, isliye expected outcome se chhota move hota hai.

News par price move ka first-order formula likho.

Δ P \approx f^{'} (E [X]) \cdot (Actual - Consensus)

Ek company profit expectations beat karne ke bawajood kyun gir sakti hai?

Agar Actual < Consensus toh surprise negative hota hai, chahe profits positive hon.

IV crush kya hai?

Scheduled number release hone par event-driven implied volatility ka collapse, jo option premiums deflate kar deta hai.

Ek options buyer direction mein sahi hone par bhi kyun lose kar sakta hai?

IV crush woh event volatility premium hata deta hai jo unhone pay kiya tha, jo directional gain se zyada hota hai.

Jab rate hike fully expected hota hai, toh market ko actually kya move karta hai?

Forward guidance/tone — nai, un-priced information.

Teen high-impact scheduled events ke naam batao.

Interest-rate decisions, CPI/inflation, employment (NFP), saath hi GDP aur earnings.

Sensitivity term

f^{'}

kya represent karta hai?

Yeh particular asset ki price us data driver ke liye kitni strongly respond karti hai.

Recall Feynman: 12 saal ke bachche ko explain karo

Socho tumhari class pehle se guess karti hai ki tum test mein 90 laoge. Agar tumhe exactly 90 milte hain, koi surprised nahi hota — koi gasp nahi karta. Lekin agar 60 milte hain, sab react karte hain! Stock market bhi aisa hi hai: prices pehle se news "guess" kar leti hain. Woh tabhi jump karti hain jab reality guess se alag hoti hai. Aur results aane se pehle, sab nervous hote hain aur "reaction tickets" (options) ke liye extra pay karte hain; jis moment result pata chalta hai, nervousness disappear ho jaati hai aur woh tickets saste ho jaate hain — chahe tumne direction sahi guess kiya ho.

Connections

Market Sessions and Liquidity — news sabse zyada active sessions ke overlap mein land karti hai.
Economic Calendar — jahan scheduled high-impact events listed hote hain.
Implied Volatility and Options Pricing — IV-crush mechanism.
Efficient Market Hypothesis — "priced in" ka theoretical basis.
Risk Management around Events — position sizing jab surprise variance high ho.