The Turnaround Story We Must Address in Intel CorporationDate Published: 2018-03-31
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.
Intel Corporation (NASDAQ:INTC) is experiencing one of the most abrupt mega cap tech turnarounds in recent history, and it has led to monstrous pre-earnings optimism.
Here is a 5-year chart for Intel, note the dead period for much of this bull market, and then the recent surge:
If we zoom into that surge, and add the earnings dates, we can see two phenomena: (1) Pre-earnings run-ups in the stock, and (2) earnings gaps higher which lead to yet more optimism.
(All of these charts are available for free on www.CMLviz.com)
This has created a trade-able phenomenon which has shown four wins in a row and over 700% returns in less than two-months of total holding time.
Intel has earnings due out 4-26-2018 and 14-days before then would be 4-12-2018.
Let's look at the results of buying a monthly call option in Intel Corporation two-weeks before earnings (using calendar days) and selling the call before the earnings announcement, but right on that day. Since Intel reports after the market closes the trade closes before earnings, so this trade does not make a bet on the earnings result.
Here is the set-up, explicitly:
Here are the results over the last year in Intel Corporation:
The mechanics of the TradeMachine™ are that it uses end of day prices for every back-test entry and exit (every trigger).
We see a 706% return, testing this over the last 4 earnings dates in Intel Corporation. That's a total of just 56 days (14 days for each earnings date, over 4 earnings dates).
The trade will lose sometimes, but over the most recent trading history, this momentum and optimism options trade has won ahead of earnings.
While this strategy had an overall return of 706%, the trade details keep us in bounds with expectations:
➡ The average percent return per trade was 142% per 14-day period.
It was easy enough to uncover this new trend using the Trade Machine Pro® scanner. We looked at the NASDAQ 100 as our study group and then the "14-days pre-earnings long call" strategy:
And Intel's results were eye-popping:
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:
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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.