Is Saleforce.com headed to new highs?

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One big investor is betting that Salesforce.com will break out.

optionMONSTER's Heat Seeker tracking system detected the purchase of 7,000 April 150 calls for $5.40 and the sale of an equal number of April 170 calls for $0.70. Volume was more than 8 times open interest in both strikes.

This bullish call spread cost $4.70 to open. It will earn a maximum profit of 326 percent if CRM closes at or above $170 on expiration, about $10 above its all-time high from last summer. (See our Education section)

The stock, whose ticker stands for "customer relationship management," is up 0.74 percent to $147.16 in midday trading. Its web-based products are used by a wide array of companies on a subscription basis. Investors like that model because it generates a steady flow of revenue, compared with the older system where programs were bought and installed in one shot at a time.

CRM's last financial report on Feb. 23 beat expectations in both earnings and revenue. Guidance was also strong, causing the shares to gap higher. Since then they have been consolidating in a range. (See researchLAB for more)

Overall option volume is slightly above average in the stock so far today, with calls outnumbering puts by more than 8 to 1, according to the Heat Seeker.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: CRM

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