Trading Momentum into Earnings Optimism With Options in O'Reilly Automotive Inc – CML News

This article was originally published on this site

There is a powerful pattern of optimism and momentum in O’Reilly Automotive Inc (NASDAQ:ORLY) 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 1,125% annualized returns, but has also shown a high win-rate of 75%.

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 O’Reilly Automotive Inc.