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Prior research has documented a long history of positive autocorrelation in firms’ earnings announcement news. This is one of the main features of the post-earnings announcement drift phenomenon and is typically attributed to investors’ underreaction to earnings news. I document that this autocorrelation has become significantly negative for firms with active exchange-traded options. For these easy-to-arbitrage firms, the firms in the highest decile of prior earnings announcement abnormal return (prior earnings surprise), on average, underperform the firms in the lowest decile by 1.29% (0.73%) at their next earnings announcement. Additional analyses are consistent with investors learning about post-earnings announcement drift and overcompensating. It seems that due to their well-documented history of apparently underreacting to earnings news, investors are now overreacting to earnings announcement news. This paper shows that attempts to exploit a popular trading strategy based on relative valuation can significantly reverse the previously documented pattern.