How to Get Paid to Buy CRM at a Steep Discount
At about $266.12 a share, Salesforce (CRM) is trading about 26% below its 52W high.
Do you think CRM stock is a good long-term bet at current levels? What about at a 30% discount at about $190 per share? If you think that is a steal, and have some cash ready to go, here is a trade.
8.6% annualized yield at 30% margin of safety, by selling Put Options.
- Sell a long-dated Put option expiring 1/15/2027, with a strike price of $190
- Collect roughly $890 in premium per contract (each contract represents 100 shares)
- That’s about 4.6% annualized yield on the $19,000 you’re setting aside for the possibility of buying the stock
- This cash parked in a savings or money market account will earn an extra 4.0%, taking total yield to 8.6%
- And you give yourself a chance to buy CRM stock at deep discounted price of $190
However, this is not the only stock strategy in town. Trefis High Quality Portfolio is a sophisticated framework designed to reduce stock-specific risk while giving upside exposure.
Possible Trade Outcomes: You Win Either Way
| Stock Price Outcome | What It Means For You |
|---|---|
| CRM stays above $190 | You keep the full $890 premium – 4.7% extra income over the next 373 days on cash that might otherwise earn you 4.0% or less. You never buy the stock and simply walk away with the cash. |
| CRM closes below $190 | You’ll be obligated to buy 100 shares at $190. But thanks to $890 premium, your effective cost basis is just $181.1 per share – a roughly 32% from current level. |
But to hold this trade with conviction, you want to see long term upside in the stock. Because if it comes to it, you want to be excited about buying the stock cheap.
First, you want fundamentals to check out. For details, see Buy or Sell CRM Stock or check Salesforce Investment Highlights
Second, you want to better understand competitive advantage and industry tailwinds. Below is what specifically gives us the conviction.
Why Hold CRM Stock Long-Term
Salesforce’s wide economic moat, driven by high switching costs and a dominant market position, combined with a strong secular tailwind in digital transformation and a robust financial position, makes it a desirable long-term holding. The company is deeply embedded in its customers’ operations, ensuring recurring revenue and a durable competitive advantage. Even in a market downturn, the essential nature of its services should support a recovery.
Competitive Advantage
We classify CRM’s economic moat as WIDE, with the primary source being Switching Costs
- Salesforce has demonstrated pricing power by implementing price hikes, most recently in 2023 and 2025, with analysts noting that large customers are unlikely to churn due to being locked into long-term contracts.
- High switching costs are evident from the deep integration of Salesforce into customer workflows, requiring significant investment in implementation, customization, and employee training, making a move to a competitor disruptive and costly.
- Salesforce maintains a dominant and growing market share in the CRM space, consistently outpacing its closest competitors like Microsoft, Oracle, and SAP.
- The ‘Salesforce’ brand is often considered the gold standard and default choice in the CRM industry, indicating strong mindshare and brand loyalty.
Industry Tailwind
The industry tailwind is STRONG, with CAGR projection of 14.6% (Grand View Research)
Secular Trend: Digital Transformation (Shift to SaaS/Cloud)
Key Risks: Regulatory scrutiny in data-sensitive industries (e.g., finance, healthcare) and ongoing lawsuits concerning data breaches and the use of copyrighted material for AI training.
Financial Guardrails
Cash Generation: Positive Free Cash Flow
Balance Sheet: Salesforce maintains a strong balance sheet with a significant net cash position, having more cash and cash equivalents than total debt, which indicates a very low risk of bankruptcy.
Not comfortable with options or stock-specific trades? PORTFOLIOS are even better.
The Best Investors Think In Portfolios
Individual picks can be volatile but staying invested is what matters. A diversified portfolio helps you stay the course, capture upside and reduce downside
The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.