SHS Web Conf.
Volume 83, 2020Current Problems of the Corporate Sector 2020
|Number of page(s)||7|
|Section||Economics, Management and Finance|
|Published online||30 October 2020|
Using Price Gaps for Hedging Prices and Making Financial Decisions
University of Economics, Faculty of Business Management, Department of Business Finance, Dolnozemska cesta 1, 851 04 Bratislava, Slovakia
* Corresponding author: firstname.lastname@example.org
Price gaps in assets pricing are relatively rare. Gaps arise at the moment when the open price of a new period opens significantly lower or higher than the close price of the previous period. The aim of this paper is to find out how often gaps are created in the prices of a selected underlying asset and how they can be used for improving the corporate financial situation. The object of our examination was a soybeans oil commodity traded on the e-CBOT futures market while the subject of the research were the price gaps themselves, the frequency of their occurrence and the likelihood of their closing. Data were analyzed over a period of 30 years. The fact that it is more likely than unlikely that the price will return and close the gap has been confirmed. The larger the price gap was, the longer it was necessary to wait for it to close. However, as for trading, it was also possible to take advantage of the low probability that the price gap would be closed - to set up a suitable stop loss order.
© The Authors, published by EDP Sciences, 2020
This is an Open Access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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