In January, the stock fell off a cliff from $76 to $60 due to secondary share offering. After the market was able to fully absorbed dilution, the stock has been nicely climbing up now trading at $80. The $75 which was resistance before should now act as support if we get a pullback in CRM or in general market. Yesterday, there was massive unusual bullish activity through a call ratio spread. The trader bought 13,000 August $85 calls and sold twice as many or 26,000 August $100 calls. That was a $4 million trade that will produce maximum profits of ~$15 million if the stock closes at $100 on August expiration. The profit zone on that ratio spread is $87 and $112. Anywhere outside of this range the trader stands to lose money.
I am bullish on CRM and like the following calendar spread:- Buy to open August $85 calls
- Sell to open May $85 calls
I just filled the order for $2.90 debit. The plan here is similar to AAPL, V, MEE and GS. If the stock doesn't make a move above $85 anytime soon, I will continue to sell front month $85 calls to keep bringing down my cost basis for long August $85 calls. We have May, June and July months to do so. If the stock does make a move above $85, I will roll front month short calls to next month $90 calls for even money or net credit.
Good luck!
