Let's review the T3/OP video with Scott and Jill as they walk us through some levels on the charts and the fundamental concerns to the story.
I prefer tackling the downside when speculating on the price of CRM. I know that hope ends up in despair and that CRM is a huff and a puff away from getting crushed as any stock this year has suffered when not performing up to market expectations. Enter into this mix the fact that Oracle (ORCL - Get Report) and IBM (IBM - Get Report) are taking the company on in CRM's cloudy business! These are adversaries you do not want!
I have CRM technically positioned for another attempt to test the hands of the CRM longs. In addition, I have lots of new serious company as reflected in the total percent of traders that are now short CRM common stock. That total now exceeds 10% of the CRM float!
Trading at a ludicrous P/E ratio (over 600 but whose counting!) that belongs in the clouds, and not even showing growth to support that price earnings ratio, is one dangerous formula for a stock price disaster in the making. It certainly is a combination of statistics that deserves another round of playing CRM from the controlled risk short side via put options.
That trade is a bearish vertical call spread. This type of trade is normally medium in risk because it is biased (to the downside) as per price direction required for the trade to become profitable. However, due to the short time remaining to expiration, this trade I consider HIGH in risk! This trade is medium in reward potential because it is a hedged spread, thus capping the potential for gains.
Trades: Sell to open 3 CRM November 105 calls at $24.00 and buy to open 3 CRM November 125 calls for $10.00.
The total risk for the spread is $6 per spread. As always, I will monitor the trade on this site in the comments section below.
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