Options Traders Anticipate Bull Market in Software Stocks Ahead of Salesforce Earnings
New bull market in software stocks hinges on this report
Image: Cnbc
Options traders are optimistic about a bull market in software stocks, particularly focusing on Salesforce's upcoming earnings report. The iShares Expanded Tech-Software Sector ETF (IGV) shows a bullish trend, with significant call-buying activity indicating expectations for a major stock movement.
- 01Options trading volume in the iShares Expanded Tech-Software Sector ETF (IGV) has been increasingly bullish, with calls outpacing puts significantly.
- 02Salesforce's stock has dropped over 50% from its peak 18 months ago, but the sector has rebounded more than 25% since April.
- 03On Tuesday, more than 10,600 call options for Salesforce were purchased compared to just over 4,100 puts, indicating strong bullish sentiment.
- 04Implied volatility for Salesforce suggests a potential 7.8% price swing, which is significantly higher than the average movement after previous earnings reports.
- 05A notable trader invested $650,000 in 2,000 call options for Salesforce, betting on a 10% price increase by the end of the week.
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Options traders are showing strong bullish sentiment towards the software sector, particularly in anticipation of Salesforce's earnings report. The iShares Expanded Tech-Software Sector ETF (IGV) has seen a notable increase in call options trading, with a ratio of more than twice as many calls as puts. This shift comes as Salesforce's stock has experienced a significant decline of over 50% from its all-time highs more than 18 months ago, yet the sector has rebounded by over 25% since its lows in April, marking a technical definition of a new bull market. On Tuesday alone, trading in Salesforce options surpassed that of the IGV, with 61% of the total premium focused on call contracts. The market is pricing in an implied volatility of 7.8%, indicating expectations for a substantial price movement following the earnings announcement. One trader made a significant bet, purchasing $650,000 worth of call options, anticipating a 10% rise in Salesforce's stock by the weekend.
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