Since it is a long weekend I thought I would put out the daily afternoon idea in time to trade Thursday, so you can take an extra long weekend. In fact you have to trade this before the close to capture the catalyst. Salesforce.com, $CRM, had been moving higher off of a base around 41 until it met the prior high at 47 a few days ago. The pullback began and cascaded with the market pullback Thursday mornings. Opening on the 50/100 day Simple Moving Average (SMA) cross, it has rebounded strongly into the earnings report tonight, closing the opening gap down. The Relative Strength Index (RSI) is in bullish territory but pulling back from a technically overbought condition with a Moving Average Convergence Divergence (MACD) indicator starting to rollover, giving a short term bias to a pullback. Support lower comes at 45, 42 and 40.70 followed by 39 and 35. There is no resistance higher above the top at 47.58. The reaction to the last 6 earnings reports has been a move of about 7.82% on average or $3.60 making for an expected range of 42 to 49.30. The at-the money May weekly Straddles suggest a similar $3.40 move by Expiry Friday with Implied Volatility at 170% well above the June at 45%. Short interest is elevated but not very high at about 9%. Traders were buying the June 35 Put/July 39 Put combo for a 50c credit and the June 43.75/45 Bullish Risk Reversal through out the day, at much cheaper levels earlier.
Trade Idea 1: Buy the June 43.75/45 bullish Risk Reversal for $1.30.
Trade Idea 2: Buy the June 43.75/47.5 bullish Risk Reversal for $0.28.
Trade Idea 3: Buy the May/June 47.5 Call Calendar for $0.68.
Trade Idea 4: Sell the June 40 Puts for a $0.45 credit.
Trade Idea 5: Sell the May/June 40 Put Calendar for a $0.30 credit.
I like #2 standing alone or #3 paired with #5
Want to learn more about Dragonfly Capital Views?
Dragonfly Capital Views Performance Through May 2013 Expiry and sign up here.
Could Be A Good Spot For a Pullback
Posted by Greg Harmon on May 23rd, 2013 at 8:00 am, Comments: 0
About 7 weeks ago I noted that the Percent of stocks trading above their 200 day Simple Moving Average (SMA) was getting up to historical [...]
Don’t Forget the Euro, It Gets Jealous!
Posted by Greg Harmon on May 22nd, 2013 at 4:50 pm, Comments: 0
The Euro seems to have taken a back seat the last couple of weeks. First the BOJ manipulated managed their currency leading to a soaring [...]
The Coffee is Still Percolating
Posted by Greg Harmon on May 22nd, 2013 at 8:06 am, Comments: 0
♫ McDonald’s is My Kind of Place … ♫
Posted by Greg Harmon on May 21st, 2013 at 4:52 pm, Comments: 0
Just back from my daughter’s Kindergarten class I was waxing nostalgic this afternoon. I can’t say that I remember this commercial from 1967 but I [...]
Checking the Gold to Oil Ratio
Posted by Greg Harmon on May 21st, 2013 at 8:00 am, Comments: 0
Jumping into the Big Oil Gush
Posted by Greg Harmon on May 20th, 2013 at 4:53 pm, Comments: 0
One name in the Oil and Gas services sector gave a clue that a turn around higher was coming, Halliburton, $HAL. Back in late April [...]
New Website Tab – SPY Sentiment
Posted by Greg Harmon on May 20th, 2013 at 1:49 pm, Comments: 0
Just a quick post to point out an enhancement to the website. Subscribers know that I produce a lengthy weekly Macro post every Friday night, [...]
Top Trade Ideas for the Week of May 20, 2013: Bonus Idea
Posted by Greg Harmon on May 20th, 2013 at 8:07 am, Comments: 0
Top Trade Ideas for the Week of May 20, 2013: The Rest
Posted by Greg Harmon on May 19th, 2013 at 5:16 pm, Comments: 0
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
Dragonfly Capital Updates
- A Lead for an Earnings Trade in Salesforce.com
- Premium Earnings 5-23-13
- Could Be A Good Spot For a Pullback
- Don’t Forget the Euro, It Gets Jealous!
- Premium Earnings 5-22-13
- The Coffee is Still Percolating
- ♫ McDonald’s is My Kind of Place … ♫
- Premium Earnings 5-21-13
- Checking the Gold to Oil Ratio
- Jumping into the Big Oil Gush