Trading Earnings Optimism With Options in Weight Watchers International Inc – CML News

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PREFACE
There is a powerful pattern of optimism and momentum in Weight Watchers International Inc (NYSE:WTW) 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, and in fact, it hasn’t even won more often than it has lost, but since this strategy has a celever risk control, the winning trades are so much larger than the losing trades, that it has returned 879% annualized returns.

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 Weight Watchers International Inc.