Major technology stocks like Apple and Microsoft jumped on quarterly results. Will peer Saleforce.com make a similar move?
Marc Benioff’s provider of cloud-based marketing software is up 49 percent this year after a sharp selloff in 2022. It has paused over the last month, but some traders may see positive signals on the chart.
First is the $200 price level near the March 31 peak. CRM has made incrementally higher lows since then to produce an ascending triangle. That’s a potentially bullish continuation pattern.
Second is the gap higher on March 2 after quarterly profit and revenue beat estimates. It also issued strong guidance and increased its stock buybacks.
The news fits into a bigger narrative of Silicon Valley companies renewing their focus on profitability. CRM bowed to pressure from activist Elliott Investment Management and reduced headcount, following similar moves by MSFT, Meta Platforms (META), Alphabet (GOOGL) and Amazon.com (AMZN).
The software company also embraced the newest growth theme by saying on March 7 it would add generative artificial intelligence (AI) throughout its products.
The next earnings report is estimated for May 30, but options traders could be looking for the stock to move sooner.
Call volume hit a six-week high of 40,305 on Monday, according to TradeStation data. The busiest contracts were the weekly calls expiring this Friday:
- About 10,000 12-May 205 calls were purchased, mostly for $0.35 to $0.39.
- Some 6,800 12-May 200 calls were purchased, mostly for $1.70 to $2.94.
- Volume was more than 5 times open interest in both strikes, which suggests new buying.
Calls fix the price where investors can buy a security. They can appreciate when a stock rallies but will expire worthless if the shares remain below the strike price.
CRM briefly hit a new 52-week high of $200.50 but eased back to close Monday up 0.16 percent at $197.90.
Overall option volume was almost twice the daily average, with calls accounting for a bullish two-thirds of the total.
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