The Trade Desk Inc (NASDAQ:TTD) : Pre-earnings Momentum Trade With a Technical Trigger
Date Published: 2019-08-13
DisclaimerThe results here are provided for general informational purposes from the CMLviz Trade Machine Stock Option Backtester as a convenience to the readers. The materials are not a substitute for obtaining professional advice from a qualified person, firm or corporation.
PrefaceThe Trade Desk (TTD) crushed earnings but like many other high fliers, the stock did not hold up well off of the report... until today. A bullish pattern has collided with the technicals, right now.
Remember that the technical conditions must hold through the end of the day for a trigger.
The Bullish Option Trade in The Trade Desk IncWe will examine the outcome of getting long an at the money call option that is closest to 45-days from expiration if and only if the following technicals are satisfied.
If the stock price fails the technical requirement, it's fine, we just put a pin in it and check later. Even better, we can set an intra day alert in Trade Machine that will email and/or text you when both requirements are met.
RISK MANAGEMENTWe 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.
RESULTSHere are the results over the last three-years in The Trade Desk Inc:
Setting ExpectationsWhile this strategy had an overall return of 374%, the trade details keep us in bounds with expectations:
➡ The average percent return per trade was 22.4%.
Checking the Moving AverageYou can check to see if the moving averages for TTD are satisfied by using the Pivot Points tab on www.CMLviz.com.
Back-testing More Time Periods in The Trade Desk Inc
Now we can look at just the last six-months as well:
➡ The average percent return over the last year per trade was 77.6%.
WHAT HAPPENEDThis is how people profit from the option market, its empirical testing, not luck. Tap here to learn about becoming a Trade Machine.
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.
You should read the Characteristics and Risks of Standardized Options.