Food For Thought on $BA

Interesting article with good track record on trade. Of course, past performance is ….

Boeing Company (The) (NYSE:BA) : Right After Earnings, The Intelligent Options Trade
Date Published: 2017-07-20

LEDE
This is a simple option trade that starts two-days after Boeing Company (The) (NYSE:BA) earnings and lasts for the one month to follow, that has been a winner for 3 straight years.

Boeing Company (The) (NYSE:BA) Earnings
While the mainstream media likes to focus on the actual earnings move for a stock, that’s the distraction when it comes to the option market.

For Boeing Company (The), irrespective of whether the earnings move was up or down, if we waited two-days after the stock move, and then sold a one-month out of the money put spread, the results were simply staggering. We use two-days to allow the stock to fully reach equilibrium post earnings.

We can examine this intelligent approach, objectively, with a custom option back-test. Here is our earnings set-up:

Rules

  • Open short put spread 2-days after earnings
  • Close short put spread 29 days later
  • Use the 30-day options

RETURNS
If we sold this 30/10 delta out-of-the-money put spread in Boeing Company (The) (NYSE:BA) over the last three-years but only held it after earnings we get these results:

Intelligent Short Put Spread

  • Monthly Options
  • Back-test length: three-years
  • Open 2-days After Earnings
  • Close 29-days Later
  • Holding Period: 28-Days per Earnings

Winning Trades:
10
Losing Trades:
2
Post-Earnings Short Put Spread Return:
 103.8% 
Annualized Return:
 113% 

We see a 103.8% return, testing this over the last 12 earnings dates in Boeing Company (The). That’s a total of just 336 days (28 days for each earnings date, over 12 earnings dates).

We can also see that this strategy hasn’t been a winner all the time, rather it has won 10 times and lost 2 times, for a 83% win-rate.