Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Four Ways to Play Salesforce.com

By

The stock has a chance to rally higher, as it is trading within 11% of its highs going into earnings.

PrintPRINT
MINYANVILLE ORIGINAL It seems like Salesforce.com (CRM) shares bottomed at $121 in August and it has been straight higher since. I think that the stock has a chance to rally higher, as it is trading within 11% of its highs going into earnings. It has had difficulty trading above the $150 level in months past, but it might be time for a breakout higher. The stock is trading above all of the moving averages of the 50,100, 150, and 200 daily moving average ("DMA") but a pullback to 200 DMA of $133 is not unrealistic.

Salesforce's CEO Mark Benioff has boosted recent sales by increasing customers' exposure to social media, giving the company an edge in the market. Salesforce has faced favorable business conditions to sell its software as businesses move toward cloud computing. Bears will focus on IBM's (IBM) recent release of its own cloud-based management software.


Click to enlarge

Here is a list of Salesforce's movement over the last four quarters:

05/18/12 $133.80 $145.58 $+11.78 (8.8%)
02/24/12 $131.77 $143.64 $+11.87 (9.0%)
11/18/11 $126.09 $113.43 $-12.66 (-10.0%)
08/19/11 $114.06 $111.00 $-3.06 (-2.7%)
Average Magnitude of Post Earnings Return 7.6%

This is the Implied Movement between now and September expiration:

Term Strike NBBO Size %Spot(Mid)
08/31 $145 $15.25 - $15.75 1 x 32 10.5%
08/31 $150 $15.15 - $15.60 1 x 53 10.4%

Four Ways to Play the Stock for Earnings

Buying Movement:
Trade: Buying the September 145 Puts-150 Call Strangle for $11.70
Risk: $1170 per a lot
Reward: Unlimited
Breakeven: $133.70 or $163.70

Selling Movement:
Trade: Selling the September 135-130 Put Spread and 160-165 Call
Spread Condor for $1.90
Risk: $310 per 1 lot
Reward: $190 per 1 lot
Breakeven: $133.10 or $161.90

Bullish:
Trade: Buying the Sep 155-165-175 Call Fly for $1.80
Risk: $180 per 1 lot
Reward: $820 per 1 lot
Breakeven: $156.80 and $173.20

Bearish:
Trade: Buying the Sep 155 Puts for $10.80
Risk: $1080 per 1 lot
Reward: $14,420 per 1 lot
Breakeven: $144.20
< Previous
  • 1
Next >
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE