Options traders are signaling renewed optimism in the software sector, particularly ahead of Salesforce’s earnings report scheduled for Wednesday. The iShares Expanded Tech-Software Sector ETF (IGV) has seen a notable shift in sentiment, with call options trading outpacing puts by more than two to one, indicating bullish expectations. In stark contrast, the VanEck Semiconductor ETF (SMH) has experienced a heavier flow of put options, suggesting a divergence in market sentiment across tech sub-sectors.
Salesforce, which has lost over 50% from its peak, is positioned to significantly influence the broader software market, which has rebounded more than 25% since April’s lows. Notably, the volume of options traded in Salesforce alone surpassed that of the IGV on Tuesday, with a striking 61% of the premium in calls. Traders are bracing for a substantial price movement, with implied volatility suggesting a 7.8% swing, more than double the average post-earnings move.
Market professionals should closely monitor Salesforce’s earnings, as its performance could validate the current bullish sentiment in the software sector or signal continued caution among investors.
Source: cnbc.com