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Option Market Value‐Based Reaction and Anticipation of Corporate‐Related Decisions by the United States Supreme Court

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  • Yehuda Davis
  • Suresh Govindaraj
  • Yi Liu
  • Kate Suslava

Abstract

Our paper studies the option market reactions to judicial decisions in the United States Supreme Court (SCOTUS) relating to cases where at least one party involved is a public firm. Prior research finds the stock market is unable to anticipate SCOTUS's actions and registers a significant negative stock market reaction to the grant of certiorari (acceptance of a petition to review a lower court's decision) for respondents and, surprisingly, for petitioners as well. We show the negative price reaction for both petitioner and respondent firms is a consequence of increased uncertainty. We also provide evidence that on the day certiorari is granted, the option market anticipates the final decision by SCOTUS. We believe we are the first to study the ability of futures markets to predict SCOTUS decisions.

Suggested Citation

  • Yehuda Davis & Suresh Govindaraj & Yi Liu & Kate Suslava, 2026. "Option Market Value‐Based Reaction and Anticipation of Corporate‐Related Decisions by the United States Supreme Court," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 46(6), pages 1022-1031, June.
    • Handle: RePEc:wly:jfutmk:v:46:y:2026:i:6:p:1022-1031
    DOI: 10.1002/fut.70094
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