Salesforce Option Trade Banks On Pre-Earnings Volatility

Blockhead11-21 21:35

Salesforce (CRM) is a highly rated stock with an outstanding three-year EPS growth rate of 28% and a three-year sales growth rate of 15%. There is also some volatility skew due to earnings on Dec. 3, ...

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GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.investors.com/research/options/salesforce-stock-earnings-option-trading/><strong>Blockhead</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Salesforce (CRM) is a highly rated stock with an outstanding three-year EPS growth rate of 28% and a three-year sales growth rate of 15%.\nThere is also some volatility skew due to earnings on Dec. 3, ...</p>\n\n<a href=\"https://www.investors.com/research/options/salesforce-stock-earnings-option-trading/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"CRM.AU","symbol_name":"Carbon Minerals","start_time":0,"source_url":"https://www.investors.com/research/options/salesforce-stock-earnings-option-trading/","article_id":"2485494429","we_media_id":null,"thumbnails":["https://www.investors.com/wp-content/uploads/2018/04/stock-Salesforce-06-shutter-150x150.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485494429","pubTimestamp":1732196123,"sourceInfo":{"source_id":"investor_business_daily_highlight","name":"Investor’s Business Daily"},"weMediaInfo":null,"summary":"The trade will do well if Salesforce stays above 280 for the next week or so.","collect":0,"end_time":0,"defaultTopTitle":"investors.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"CRM.AU":"Carbon Minerals","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","IE0034235188.USD":"PINEBRIDGE GLOBAL FOCUS EQUITY \"A\" (USD) ACC","NVD":"GraniteShares 2x Short NVDA Daily 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advantage of this skew is via a diagonal put spread.\n\n\n\n↑\nX\n\n\n\n\n7: Diagonal Call Spread\n\n\nSee All Videos\n\n\n\n\nNOW PLAYING\n7: Diagonal Call Spread\n\n\n\n\nThis option strategy is an advanced strategy because it utilizes options over different expiration periods and different strike prices.\nLet's look at an example:\nTraders could sell a Dec. 6 put with a strike price of 295 and buy a Dec. 20 put with a strike price of 290.\nAs of Wednesday's close, the Dec. 6 put could be sold for around 2.95 and the Dec. 20 put could be bought for 3.25.\nThe trade would result in a net debit of around $0.30, which means there is very little risk on the upside. The worst that can happen is that the puts expire worthless and the trader loses the $30 in premium paid.\nMax Potential Gain Of $1,500\nThe risk on the trade is on the downside, with a potential maximum loss of $1,030. This is calculated by taking the difference in the spread (10) multiplied by 100 and adding the premium paid ($30).\n\nThe maximum potential gain is around $1,500, which would occur if Salesforce closes right at 295 on Dec. 6.\nThe breakeven price is estimated at around 279. The trade will do well if Salesforce stays above 280 for the next week or so.\nAiming for a return of around 10%-15% makes sense, and I would set a similar stop loss.\nThe worst-case scenario is a sharp drop in Salesforce early in the trade. For this reason, if the stock drops below 295 in the next few weeks, I would also consider closing the trade early to minimize losses.\nThe initial trade set up has a delta of 1, meaning the position is roughly equivalent to owning one share of Salesforce. Note that this delta number can change significantly as the stock starts to move.\nOne of the advantages of the trade is that the put we are selling has higher volatility (51%) than the put we are buying (43%). Just like stocks, when it comes to volatility, we want to buy low and sell high.\nClose Salesforce Trade Before Earnings\nClosing before the earnings date of Dec. 3 is a good idea to avoid earnings risk.\nAccording to the IBD Stock Checkup, Salesforce stock is ranked No. 7. In its industry group and has a Composite Rating of 97, an EPS Rating of 97 and a Relative Strength Rating of 85.\nA bull put spread for Nvidia (NVDA) earnings discussed Monday looks like it should achieve a full profit.\nIt's important to remember that options are risky and investors can lose 100% of their investment.\nThis article on Salesforce stock is for education purposes only and not a trade recommendation. Remember to always do your own due diligence and consult your financial advisor before making any investment decisions.\nGavin McMaster has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. Follow him on X/Twitter at @OptiontradinIQ\nYOU MIGHT ALSO LIKE:\nEli Lilly Option Trade Produces $1,125, If You Can Tolerate The Heavy Risk\nAmgen Stock Has High Implied Volatility. An Iron Condor Takes Advantage.\nAs AMD Struggles, Bearish Option Trade Could Return 11% In About 5 Weeks\nDelta Air Lines Option Trade Generates $175, But Watch For This Risk","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485494429"}