Do not hold your puts into the close. You have already been played by smart money, the final bear trap is to have you.... home players short the 50 DMA at the close or double down on worthless puts. CRM will gap up after hours and you will be forced to cover or close your puts. Your actions will drive CRM to a new 52 week high. Then when the short play makes more sense you will not have any more money.
Option writers wrote your puts with this entire play in mind. You have been played.
So now... the moment of truth......I started this tread back on March 30, 2011. Could it be....
Don't be a fool, once everyone starts to do the same thing and trade the same strategies... smart money managers will throw you curve ball. Expect that they are actually manipulating the market...I MEAN REALLY. And you stand to make a lot of money!
Same thing it has done for the past .... 3 sessions and every time you all call it a head fake and everytime I tell you it's a bear trap. The smart short unload at a resistance level and the lemmings pile in, then the smart shorts cover at the support level and the lemmings have to cover higher than they shorted. Classic bear trap. But what do I know.....
Targets are meaningless. When X was around 65, GS issued a buy and a much higher price target. I'm giving that example because X had (I don't know what it is now) a short ratio larger than CRM's. X is around 53-54 now. I don't have a position in X now, though I have traded it from the short side in the past.
Hesseldahl article notes that: "Radian6 is going to be bringing in revenue on a cash-flow positive basis right away."
I wouldn't be shorting here when analysts are beginning to realize how good this new acquisition will be for CRM. Hesseldahl was initially skeptical and likes it better as he digs deeper.
Checked S&P today and they have a target price of $171, rate CRM 4 stars and--get this--rank it as MEDIUM risk.
I agree. For me it wouldn't hurt. But for someone who purchased puts when CRM was speeding down to the 200 DMA and is still holding them, it's not a good idea.
Problem is I think you get a small pull back at best. It looks like a losing proposition to me. I won't do it until we break above the 50 DMA because I believe a break out above the 50 DMA is a buy signal...not a sell.
Some dude bought puts today when CRM was at $129, I told him don't do it. All April puts under $140 strike price will expire worthless so you are playing a losers game. Buy the 50 DMA instead and you will feel real smart in a few weeks.
Like clock work, CRM is pulling back just below the 50 DMA. Now you can choose one of the following options.
A. Short more shares.
B. Buy more puts
C. Cover your shorts or close your puts.
D. Sell half your calls that are up 250% and let the profits ride
E. Be greedy and expect an after hours short squeeze.
And the answer is.......