Trading Earnings Optimism With Options in Universal Forest Products Inc – CML News

This article was originally published on this site

PREFACE
There is a powerful pattern of optimism and momentum in Universal Forest Products Inc (NASDAQ:UFPI) stock right before of earnings, and we can capture that pattern by looking at returns in the option market. The strategy won’t work forever, but for now it is a momentum play that has not only returned 190% annualized returns, but has also shown a high win-rate of 58%.

PREMISE
The premise is simple — one of the least recognized but most important phenomena surrounding this bull market is the amount of optimism, or upward momentum, that sets in the two-weeks before an earnings announcement. Now we can see it in Universal Forest Products Inc.