Stock Struggling to Rebound Ahead of Earnings

Analysts and options traders are targeting CRM ahead of the event

Deputy Editor
Mar 1, 2022 at 1:53 PM
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Blue-chip name Inc (NYSE:CRM) is set to report fourth-quarter results after the close today. Analysts anticipate the software company to post profits of 75 cents per share, putting the price-earnings ratio at a two-year low. After these earnings expectations were announced, no fewer than three analysts slashed their price targets yesterday, including Citigroup to $220 from $308.  

Ahead of the event, the options pits are pricing in a post-earnings swing of 13.4%, regardless of direction, which is higher than the 8.2% move from the company's last eight quarters. After these reports, only three post-earnings moves were positive, and CRM staged an 11.7% drop after its most recent report. 

Options traders are optimistic, however, and the 47,000 calls across the tape so far today is double the typical call volume seen at this point, and more than doubling the number of puts. The weekly 3/4 250-strike call is the most active by far, with new positions being bought to open there. 

In the past 10 days, 2.84 calls have been bought for every put at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio is higher than 80% of readings in its annual range, showing a strong penchant for calls lately. 

CRM is bouncing off its Feb. 24 18-month low of $184.44, on track for its fourth-straight daily win. However, the stock's 30-day moving average is keeping a cap on today's gains, and looks ready to keep guiding the stock lower, depending on tomorrow's post-earnings volatility. At last glance, CRM was up 0.5% to trade at $211.70.

CRM March1




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