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Looking for the Pre Earnings Run in CRM

crm

As we head into earnings season, one of my favorite trades is to look for stocks that will move in anticipation of their earnings event.

What happens here is that investors, exepcting good news from the company, will start to buy the stock before they release earnings. This casuses a "pre-earnings" run in the stock.

Salesforce.com (CRM) has a lot of potential for this kind of setup. It doesn't report earnings until the middle of August.

And if we start to see good earnings across the board in the tech space (like MSFT, QCOM, and FFIV already have) then we should see the stock start being bid up in anticipation of its event.

On top of all this, it doesn't hurt that the stock is trading just a few points short of all time highs, and has seen volatility compression the entire time since its previous earnings event.

Look for the stock to run another 5 points before its earnings event. I like using bull call spreads, and if you want to be aggressive you can just buy calls straight up as earnings will help to keep the option premiums elevated.

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by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/