Salesforce Price Breakout Attracts Bullish Option Trades Ahead of Earnings

Software-as-a-service (SAAS) companies have been making a solid comeback from their deep oversold condition. Salesforce, one of the biggest losers during a prolonged downtrend, fell about 40% from highs in January to the depths in late June. Since then, it has seen a series of higher highs and higher lows, taking out some tough resistance levels.

The stock recently broke above its 200-day moving average within a steep uptrend channel, indicating volatility. Volume trends have improved, relative strength is at levels not seen since May, and money flow is bullish and improving.

As Salesforce prepares to report earnings this week, there has been some good option trades building over the past several weeks as the stock rises. Call buying has pushed higher in the September 200 and 210 strikes, with some good adds in the October series lately in the 200 to 220 strikes.