Variance swaps are natural instruments for investors taking directional bets on volatility and are often used for portfolio protection. But the crucial observation suggests that derivative professionals may desire to hedge beyond volatility risk and there exists the need to hedge higher-moment...

We show that the moving averages (MAs) of stock market indices act as psychological barriers and affect investors' trading. Market indices do not move continuously near their MAs, especially in markets dominated by unsophisticated investors. Utilizing international markets data, we show that the...