from the desk of Dr. Terry F Allen

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Posts Tagged ‘Salesforce’ (CRM) Offers Value After the Correction

Monday, October 14th, 2019’s stock price has corrected lower for the past few months which seems to offer value when considering where analyst price targets are set. Take a look at the following article which discusses an average target of $186.97 –  Investors Jump Off The Fence:, inc., (NYSE: CRM). Also, Jeffries recently reiterated their buy call with a target of $171. Although a bit conservative compared to the average, it still represents potential for a 14% rally.

There are three main things to consider from a technical perspective. The most important is that the stock is bouncing from its 20-month moving average. This is an indicator it has not traded below on a sustained basis in nearly three years. Further, there is a rising trendline in place as well as a horizontal level. The trendline is drawn connecting the low from late last year with the low that printed in mid-August. There has been a bullish reaction so far from when the stock tested the trendline early in the month. The horizontal level falls near $144 and has been respected as both support and resistance over the last year and currently falls near the trendline to create a confluence.

CRM Chart October 2019 vertical options spread

CRM Chart October 2019

If you agree there’s further upside ahead for CRM, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open CRM 15NOV19 145 Puts (CRM191115P145)
Sell To Open CRM 15NOV19 150 Puts (CRM191115P150) for a credit of $1.99 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CRM was trading near $150.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $197.70 and your broker would charge a $500 maintenance fee, making your investment $302.30 ($500 – $197.70).  If CRM closes at any price above $150 on November 15, both options would expire worthless, and your return on the spread would be 65% (741% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates October 12, 2019

IBD Underlying Updates October 12, 2019

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,


CRM Earnings Trade In PEA Picker Portfolio

Tuesday, May 21st, 2013

Today we placed the following orders in the PEA Picker portfolio at Terry’s Tips (this is the portfolio that has enjoyed eight consecutive gaining plays without a loss).

May 21, 2013 Trade Alert – PEA Picker Portfolio – LIMIT ORDER

I wrote a Seeking Alpha article about this play if you are interested – How To Play The Earnings Annou…

In this article I suggested buying June options for the long side but I have since noticed that the July options are less than $.50 more expensive and seem to have tighter bid-ask ranges.  These spreads should make a gain in either direction as long as the stock fluctuates less than 10% in either direction (from its current price of $46.50) after the announcement, assuming that IV of the July options will only fall by 8 (from 36 to 28):

BTO 8 CRM Jul-13 50 puts (CRM130720P50)
STO 8 CRM May4-13 47.5 puts (CRM130524P47.5) for a debit limit of $2.48  (buying a diagonal)

BTO 5 CRM Jul-13 50 calls (CRM130720C50)
STO 5 CRM May4-13 50 calls (CRM130524C50) for a debit limit of $.78  (buying a calendar) 

Happy trading.

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I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

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