Trading Earnings Optimism With Options in Wayfair Inc – CML News

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PREFACE
There is a powerful pattern of optimism and momentum in Wayfair Inc (NYSE:W) 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 804% annualized returns, but has also shown a high win-rate of 55%.

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 Wayfair Inc.