Tuesday is shaping up to possibly be a gigantic day for Salesforce. The company is scheduled to report earnings after the bell, and could formally announce the blockbuster purchase of workplace communications company Slack, in what is expected to be a half-cash, half -stock deal.
Options traders are betting that this announcement, coupled with positive earnings results, could send Salesforce soaring into the weekend.
"We did see about two times the average daily options volume, and right now the options market is implying the stock will move just under 8% [in either direction] by the end of the week," Michael Khouw, chief investment officer at Optimize Advisors, said Monday on CNBC's "Fast Money." "That's in line with the 7.7% the stock has typically averaged."
Many of the traders placing bets Monday on Salesforce were positioning themselves on the bullish side of that implied move, betting that the stock would rally sharply into the end of the week. The shares are down about 7% since this potential deal was first reported last Wednesday, and many traders see the stock making a round trip back to those levels.
"The most active options were the weekly 250-calls. Over 4,000 of those were trading, and buyers of those were obviously betting that the move could be to the upside."
Those calls, which expire Friday, were trading for an average price of $5.30 and break even about 6% higher than where Salesforce closed Monday's session.
Salesforce was trading about 1.5% lower in Tuesday's session.