Intuit Inc

+3.74 (+1.45%)

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Swing Trade Earnings Momentum in Intuit Inc

Swing Trade Earnings Momentum in Intuit Inc

Date Published:

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.

There is a pattern of bullish momentum in Intuit Inc (NASDAQ:INTU) stock just days before earnings, and we can track that by looking at swing returns in the option market. Not only has the trade won for two-straight years without a loss, it worked for our community just last quarter for a 52.2% gain in 4-days.

Here is that back-test result from last quarter:

With a newly volatile market (finally), there are so many more opportunities to examine with options and we have just recently focused on a few of those, with recent insights on GOOGL post-earnings, and Teva pre-earnings non-directional volatility back-tests.

But today, we return to the tried and true reality that we have been in a raging bull market for eight years, and January was another strong month, even with the new found fear.

Intuit does not have a confirmed earnings date quite yet, but estimates put it at about 2-22-2018. We'll have to wait for Wall Street Horizon to confirm a date, but it 's coming soon.

The Short-term Option Swing Trade Ahead of Earnings in Intuit Inc
We will examine the outcome of going long a weekly call option in Intuit Inc just four days before earnings and selling the call on the day of the news -- but since INTU reports after the market closes, this is still not an earnings bet.

This is construct of the trade, noting that the short-term trade closes before earnings and therefore does not take a position on the earnings result.

Often times we look at option set-ups that are longer-term, and take no directional bet -- this is not one of those times. This is a no holds barred short-term bullish swing trade with options and that's it. It's a bullish bet, so must be conscious of the delta risk.

We can add another layer of risk management to the back-test by instituting and 40% stop loss and a 40% limit gain. Here is that setting:

In English, at the close of each trading day we check to see if the long option is either up or down 40% relative to the open price. If it was, the trade was closed.

Below we present the back-test stats over the last three-years in Intuit Inc:

INTU: Long 40 Delta Call

% Wins: 100%
Wins: 11 Losses: 1
% Return:  461% 

Tap Here to See the Back-test

The mechanics of the TradeMachine™ are that it uses end of day prices for every back-test entry and exit (every trigger).

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We see a 461% return, testing this over the last 12 earnings dates in Intuit Inc. That's a total of just 48 days (4-day holding period for each earnings date, over 12 earnings dates).

This short-term trade hasn't won every time, and it won't, but it has been a winner 11 times and lost 1 times, for a 92% win-rate and again, that 319% return in less than one-full month of actual holding period.

Setting Expectations
While this strategy has an overall return of 461%, the trade details keep us in bounds with expectations:

      The average percent return per trade was 44.1% over four days.
      The average percent return per winning trade was 51.9% over four days.
      The percent return for the losing trade was -41.7% over four days.

Looking at More Recent History
We did a multi-year back-test above, now we can look at just the last year:

INTU: Long 40 Delta Call

% Wins: 100%
Wins: 4 Losses: 0
% Return:  182% 

Tap Here to See the Back-test

We're now looking at 182% returns, on 4 winning trades and 0 losing trades.

      The average percent return over the last year per trade was 53.4% over four days.

Bull markets tend to create optimism, whether it's deserved or not. To see how to find the best performing historical momentum, technical analysis or non-directional trades for any stock using empirical results rather than guesses, we welcome you to watch this quick demonstration video:
Tap Here to See the Tools at Work

Risk Disclosure
You should read the Characteristics and Risks of Standardized Options.

Past performance is not an indication of future results.

Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures or options. Investors could lose more than their initial investment.

Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

Please note that the executions and other statistics in this article are hypothetical, and do not reflect the impact, if any, of certain market factors such as liquidity and slippage.