The One-Week Pre-earnings Momentum Trade With Options in Franklin Covey Company – CML News

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Disclaimer
The results here are provided for general informational purposes, as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation.

PREFACE
There is a bullish momentum pattern in Franklin Covey Company (NYSE:FC) 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 120.9%, but has also shown a win-rate of 57%.

This same strategy also worked in the throes of the bear market from 2007-2008, and we discuss those results near the finale of this article.

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 Franklin Covey Company.

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