Option Bull Places 7-Figure Bet on Salesforce Stock

CRM stock has been churning between $155 and $166 in recent months

May 9, 2019 at 1:58 PM
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Cloud name Salesforce.com, Inc. (NYSE:CRM) trading down 1% at $155.33 -- on track for a fourth straight loss -- as a big post-earnings slide for Intel (INTC) weighs on the broader tech sector. Despite this downside, CRM options traders are unusually active today, with speculators rushing to place bullish bets on the stock.

Most recently, 26,730 calls and 13,372 puts were on the tape -- more than double what's typically seen at this point in the session, and total options volume pacing in the 95th annual percentile. The bulk of the action has centered at the September 155 call, where nearly 11,000 contracts have traded.

Trade-Alert highlights 6,300 September 155 calls that crossed in a multi-exchange sweep for a volume-weighted average price (VWAP) of $12.34 each. If these calls were bought to open, the speculatorr laid out an initial cash outlay of more than $7.7 million (number of contracts * premium paid * 100 shares per contract), and will profit on a move north of breakeven at $167.34 (strike plus VWAP). Risk for the call buyer is limited to the premium paid, should CRM settle south of the strike at September options expiration.

Looking at the charts, CRM stock rallied hard off its late-December low near $120, but ran into a wall at $166 in early March -- a region that roughly coincides with the stock's +20% year-to-date return, as well as its 2016 highs. This level has served as a stiff ceiling in recent weeks, and Salesforce shares are down 7% since their most recent rejection from here on April 29, when they topped out at a record high of $167.56. On the flip side, the $155 region has emerged as a steady floor in recent months, and marked a top for the security in mid-January.

crm stock daily price chart on may 9

 

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