Trading Options for a Software Stock Facing Heavy Resistance

Are you looking to make a profitable options trade in the current market environment? If so, let’s take a closer look at Salesforce (CRM) and a potential bearish trade opportunity that could yield a 30% return on investment in just 18 days.

Salesforce recently experienced a significant drop of 22% despite beating earnings estimates in its last earnings report. The drop was primarily due to lackluster forward guidance and softer than expected growth in the current quarter. However, the stock has been recovering in the past 30 days, trading around the $267 level, which is currently serving as resistance.

As a technical analyst, I believe that gaps, such as the post-earnings gap seen in CRM, often fill over time and act as significant support or resistance zones. With a bearish outlook on CRM, I am considering a bear call spread trade to take advantage of the resistance level at $267.

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The trade setup involves selling a $265 call option and buying a $270 call option with a July 26th expiry. By implementing this strategy, as long as CRM stays below $265 by the expiration date, the trade could return a 30% ROI.

Credit spreads like this one are high-probability trades, but it’s essential to have a risk management strategy in place to mitigate potential losses. With effective risk management, these trades can be lucrative over time, generating consistent profits while minimizing downside risks.

For more insightful trading strategies and investment opportunities like this one, stay tuned to Extreme Investor Network. Our team of experts is dedicated to providing valuable insights and actionable strategies to help you navigate the dynamic world of investing successfully. Keep an eye out for more expert guidance on the latest market trends and opportunities that could elevate your investment portfolio to new heights.

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