Salesforce (CRM) – Grey Skies for Cloud – Sept 28th, 2020

Bearish – CRM – $242.74

Catch OptionsPlay’s Chief Strategist, Tony Zhang on CNBC, Options Action every Friday at 5:30 PM EST!

Market Outlook:
Equity Markets ended a choppy week on a strong note, with the QQQ (Nasdaq-100) breaking back above its $270 resistance level. It does however remain in a neutral trend below its 50 Day SMA and Tuesday’s high of $273. If markets break higher above this level next week, we would see a resumption of a bull market. Failure at this level and a break below $260 would put the markets back into a bearish tone. 

Watch Tony’s CRM Trade Video on CNBC

CRM Trade Idea:
On CNBC’s OptionsAction show on Friday, Tony Zhang looked at a technical setup for CRM. Salesforce gapped higher on strong earnings in late Aug to its $250 level on high volume. Having since broken below this level, it retested it this week as resistance and was rejected with weakening relative strength. This increases the likelihood of a gap fill to its $218 level and a reversion to its mean. With CRM implied volatility higher now then before earnings and a neutral/bearish view on CRM, Tony is selling an Nov 6th $245/$260 Call Vertical @ $5.95 Credit. 

We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience.