Salesforce (CRM) Might Be a UFO!

I found some little green creature talking backwards and I managed to take his little light stick thingy. I have a bad feeling about this… but it might be a UFO!

Before we use the Salesforce…

What’s the Word on the Street?

The market is up today because of the CPI (Consumer Price Index) released this morning. It showed inflation rising mostly in-line with expectations.

The year-over-year inflation rate held at 2.7% in July, below the expected 2.8% but still elevated.

The core consumer price index, which excludes volatile food and energy prices, rose 3.1% over the year in July, above the 3% forecast and June's 2.9%. The core rate rose as expected over the month to 0.3%, above June's 0.2% increase.

The market clearly took it as a win, with traders now believing there is a 88.8% chance of the Fed cutting rates in September.

It’s worth remembering that the full effect of all the tariffs and trade deals hasn’t fully made its way through the economy yet, so inflation (and interest rates) could remain higher for longer.

Salesforce (CRM)

What Is It?

Salesforce, Inc. engages in the design and development of cloud-based enterprise software for customer relationship management. Its solutions include sales force automation, customer service and support, marketing automation, digital commerce, community management, collaboration, industry-specific solutions, and salesforce platform. The firm also provides guidance, support, training, and advisory services. The company was founded by Marc Russell Benioff and Parker Harris in 1999 and is headquartered in San Francisco, CA. The listed name for CRM is Salesforce, Inc.

Why Is It a Possible UFO?

Primarily its current share price relative to its fair value, what other option traders expect, and its volatility are the reasons CRM could be a UFO.

What About Recent News?

Salesforce has been attempting to increase its foothold in artificial intelligence. It’s made some acquisitions of smaller AI companies and expanded partnerships with others. AI is still a buzzy trend that investors like to hear about, and Salesforce seems committed to continuing to integrate it into its suite of enterprise products.

In other news, the CEO sold a small amount of stock last week, which can sometimes signal that the stock might be high when insiders sell.

Salesforce also hasn’t reported earnings yet. It will on September 3rd, but I’m hoping to be out of the trade long before then.

What’s the Current Price?

Salesforce has taken a beating all year. Down ~18% in the past 3 months, down ~11% in the past month, and down ~8% in the past week. It has a mixed track record with earnings going back the previous 11 quarters (6 positive moves, 5 negative ones), and its expected to move about 8.47% on its next earnings date.

What’s the Fair Value?

I’d first like to emphasize that fair value is subjective. Many analysts at many banks and institutions rate stocks differently and assign fair value in their own unique way. So, what I like to do is take all the recent fair values since the most recent earnings report and average them. In this case…

Since CRM’s most recent earnings report on 05/28/2025, it has received 18 ratings (but several were issued again by the same people, so I’m only taking their most recent one) and taking the average, the fair value might be somewhere around: $330.89.

11 ratings are a Buy, 4 are a Hold, 2 are a Sell, and the Morningstar rating is unknown. The lowest price target is $225, while the highest is $430.

What Do Options Traders Think?

Calls are trading over equidistant Puts, which means traders think there is a chance to the upside. You can see because… forget about the green columns and focus on the red. Notice how on the right side for the $215 Put it says $7.15, it’s $8.20 for the equidistant Call at $240.

The premium (the credit you receive for executing the trade) is currently less for selling Puts, as opposed to selling Calls. Basically because of that, option traders expect the stock to go up, rather than down.

How About Volatility?

The IV rank (the purple line) for CRM (stock price in blue) is currently hovering around 64.82, which is pretty high (IV rank goes from 0-100). This makes short strategies (which are what I prefer) more attractive.

What's the Trade?

My preferred trade is a variation of the wheel without the rolling, AKA cash-secured puts. I typically like to target stocks that offer a dividend and are below fair value. 

Why a dividend? If the trade results in assignment and I’m on the hook for X amount of shares, I can at least be satisfied knowing I picked a (hopefully under fair value) company that will pay me a small amount while I run the other side of the trade AKA covered calls.

CRM does offer a dividend with a yield of 0.70%.

It’s a fairly low-risk strategy (all options trading is risky!), that has a higher probability of success, but requires a higher amount of collateral. 

So if you saw the most recent image above, I already STO (sold to open) 1 contract of the $190 Put for the September 26th expiration. I like to have a DTE (Days To Expiration) that is around ~45 days.

When the trade reaches 50% profit I will buy it back. I don’t like to be greedy and go for more profit, because I would rather not waste my time being in a trade for too long.

What About Alternative Trade Ideas?

1. If the collateral requirement is too high, another idea is a put credit spread. You would sell a put at a strike below the current share price and then buy a put at a lower strike than the put you sold. By doing so, you will avoid the collateral requirement of a cash-secured put, but the credit received will be smaller. Also, if the trade goes sideways, you will not be assigned shares so no collecting dividends and running covered calls afterwards.
2. Just invest! 1 share or even fractional shares are a way to get a foothold in a stock that you think might increase in value.

Wait…Where Are the Candlesticks? And All the Other Indicators?

I know many traders love their candlesticks and a ton of indicators. I prefer simplicity. Candlesticks aren’t necessary unless you’re the kind of trader that wants to try and pick the perfect moment to execute a trade, and even then it’s not a sure thing. 

As for indicators, there are a ton. Some of them work sometimes. None are perfect. I don’t want to get bogged down with too many. You’ll drive yourself crazy looking at too many of them, so find a handful you like and stick with those.

Disclosures

• I currently have an open trade with CRM (as mentioned in this post).
• No trade is a sure thing. There is always risk involved. 
• This blog post is not meant to take the place of financial advice, but hopefully acts as a guide for learning or informational purposes.