The One-Week Pre-earnings Momentum Trade With Options in Netflix Inc – CML News

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PREFACE
There is a bullish momentum pattern in Netflix Inc (NASDAQ:NFLX) stock 7 calendar days before earnings, and we can capture that phenomenon explicitly 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 331.5%, but has also shown a win-rate of 83%.

LOGIC
The logic behind the test is easy to understand — in a bull market there can be a stock rise ahead of earnings on optimism, or upward momentum, that sets in the one-week before an earnings date. Now we can see it in Netflix Inc.