Preface
Today we update three triggers that we published in this post:
Three Pre-earnings Triggers; Oil and Tech; Two Flavors from July 19th.
Results
That post discussed three triggers for the day, all of the pre-earnings momentum type:
- CVS pre-earnings diagonal call spread
- MRO pre-earnings diagonal call spread
- FROG pre-earnings long call
All three backtests are still open, and look like this as of yesterday’s close:
Backtest link
The CVS diagonal spread is up 21% in four days and did so as the stock did this (below), where the green arrow is from TradeMachine signaling the opening of the backtest:
A long stock position, for those that aren’t option trading and prefer to use Pattern Finder instead, also would have done quite well.
Next we turn to MRO.
Backtest link
The MRO diagonal spread is up 27.9% in four days and did so as the stock did this, where the green arrow is from TradeMachine signaling the opening of the backtest:
Again, a long stock position, for those that aren’t option trading and prefer to use Pattern Finder instead, would have done quite well.
And finally we turn to FROG.
Backtest link
The FROG long call backtest is still open but is down 30% as of yesterday, though the stock is higher today.
It did so as the stock did this, where the green arrow is from TradeMachine signaling the opening of the backtest:
We can see the dark candle from today in real-time, though the PnL marks above use end of day pricing.
We will not be doing a daily recap of backtests because we will not be sharing many active backtests free non members and we are not a trading service, but this is a good start for those who are curious and want to learn more about the discovery.
Conclusion
A sample of three backtests is not enough to conclude much at all, but with the tens of thousands of backtests we ran as we introduced the power of our new (proprietary) skew and kurtosis algorithms, this is about right.
As of now, two winning trades, one losing backtest, all about the same size in gain (or loss), and a net of a winning portfolio of trades.
What we have uncovered is an anomaly.
This is a serious finding and it has resulted in superior returns and higher win rates over several backtesting windows (5-years, 3-years, 6-months) and over tens of thousands of individual backtests on several differing strategies, from long equity, to call spreads, short put spreads, and more.
The results are so much improved from traditional options trading, that you simply can’t ignore it.
Learn more about TradeMachine.
Alternatively, if options aren’t your thing but stocks are, Pattern Finder is your tool and there is a five-minute video discussing these same dynamics but only in stocks.
Thanks for reading, and please note the disclaimers below, namely that this is not to be construed as advice, not a solicitation to buy or sell any security ever, and not a replacement for a professional financial advisor.
Thanks for reading, friends.
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