CRM – Sold Naked Puts

Salesforce.com (CRM) beat earnings yesterday and shot up more than 8% today. I took the opportunity to sell naked puts on it. While CRM was trading at 55.12, I sold two January 45 naked puts (CRMMI) and received $288.50 after commissions. Implied volatility is over 60 for this strike which allowed me to sell at a strike that is $10 out of the money. Typically volatility drops quickly after earnings, but CRM has a very high p/e still and has a lot of people expecting a reality check sometime soon. It’s actually out of my range for a p/e I generally trade, but I’m banking on the good earnings news to last for two months, at least not enough to bring it down $10 before the next earnings call.

More on this topic (What's this?)

How to Profit From Volatility Through One Simple Investment (Investment U, 1/19/10)

Volatility Tracker for January 19, 2010 (Condor Options, 1/19/10)

Buying Cheap Put Options While Volatility Is Low (Blogging the Commodity Bull Market, 12/21/09)

Tech sector earnings scorecard - tech still can't get no respect (Trade Radar, 2/2/10)

Read more on Net Income, Implied volatility, Historical Volatility at Wikinvest

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