Salesforce Stock Running into Trouble on the Charts

Subscribers to Schaeffer's Weekend Trader options recommendation service received this CRM commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

Shares of software leader Salesforce Inc (NYSE:CRM) are fading from their January highs and year-to-date breakeven level. The equity recently rejected near the peak call open interest (OI) at the 265 strike. This resistance could keep a lid on the shares in the near term.

The stock's front-month gamma-weighted Schaeffer's Open Interest Ratio (SOIR) sits at 0.53, with lower readings typically associated with bearish price action in the near future. Meanwhile, max pain rolls sharply lower following the Sept. 11 expiration, toward the $200 level.

Furthermore, CRM is set to appear at the Goldman Sachs tech conference next week, followed by its annual Dreamforce event the following week, creating two potential catalysts for additional downside pressure.

Our recommended October put has a leverage ratio of 9.1 and will double in value with a -10.5% move in the underlying equity.