Stocks: Why I bought Salesforce.com [symbol CRM] Today
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Jon Najarian Sees Unusual Options Activity In Salesforce
Jon Najarian spoke on CNBC's Fast Money Halftime Report about bullish options activity in Salesforce.com, inc. CRM 0.34% and Apple Inc. AAPL 0.31% .
He noticed somebody sold almost 10,000 contracts of the May 75 puts and bought almost 10,000 contracts of the May 90 calls in Salesforce in the first half of the trading session on Monday. Najarian explained that the May expiration indicates that traders are expecting a move higher soon.
Options trading can be a bit complicated. But basically what this means is that either a lot of traders expect a move up in CRM. Of course every day there are some traders who are expecting a move up in a stock, and others expecting a move down. I saw Najarian mention it today on TV.
But what impressed me here is the size. An options contract is standardized at 100 shares. This one involved 10,000 contracts (of 100 shares each)-- a big amount.
Generally speaking, "the big boys" are smarter than the little guy. Or even-- someone may know something (positive) about CRM. Normally that might not be enough to make me do a buy-- but I've liked CRM for a while-- had been wondering whether or not I should buy it for a long time...
If I'm right (that someone knows something positive)-- it could be any one of a number of things. But I don't have to know specifically what it is...if I think they know something important.
So... I bought some (at $82.53/share), hoping that in the next few weeks it might have a nice move up.
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I was a little hesitant, because the stock is expensive-- its already moved up a lot.
And in addition, I usually buy stocks that pay a nice dividend. This one has no dividend.
It moved up, then down a bit-- closed at $82.50.
Was this purchase a mistake? Only time will tell.
Are you sure that your tinfoil hat didn't influence you in this purchase?
Actually I'm thinking it might have been an overlt risky trade. (Typically I do much lower risk trading).
Perhaps I should change hats now).