As the cloud computing giant prepared to issue its fiscal first-quarter earnings report after Tuesday's closing bell, options traders were tapering their enthusiasm for the results, Dan Nathan, co-founder and editor of RiskReversal.com, said Monday.
With the options market implying a bigger-than-usual 5.5% move in either direction for the stock, which typically moves 4.25% after earnings, traders were "rolling" down their strike calls to lower strike prices, a sign that they now believed Salesforce.com wouldn't run as high as they initially expected, Nathan said.
Part of the reason for these slightly more conservative bets is the vulnerability of Salesforce's chart, Nathan said. Having recently broken down below key support just above the $140 level, things are looking riskier, he said.