Headed into Thursday’s session, CrowdStrike (CRWD) was a rare bright spot among security software firms. With the group down 7% year to date, CrowdStrike stock stood near the top of a cup base. But shares fell sharply Thursday, weighed down by an earnings sell-off for group peer Okta (OKTA).

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CrowdStrike is next up on the earnings calendar, along with chip designer Semtech (SMTC) and Samsara (IOT), a fast-growing but volatile stock in the enterprise software group.

Some mild distribution days have started to crop up on the Nasdaq since May 16. But it hasn’t been enough to derail the confirmed uptrend.

That said, earnings sell-offs for enterprise software stocks Workday (WDAY) and Salesforce (CRM) have cast a pall on the tech sector. But it’s been a tame pullback so far for the Nasdaq composite, which is testing its 10-day moving average.

CrowdStrike Stock Heads Lower

CrowdStrike stock showed plenty of strength when the stock rallied off its recent low near 281. It tried to move above the 350 level with conviction earlier in the week, but shares reversed lower in higher volume. Big sellers were in the stock again Thursday.

Due to a strong record of earnings and revenue growth, along with bright growth prospects, CrowdStrike currently sells at a lofty valuation of 113 times trailing earnings and 83 times forward earnings. That means CrowdStrike will be held to a high standard again when it reports Tuesday after the close.

CrowdStrike stock initially shot higher on March 6 after the company reported its third straight quarter of triple-digit earnings growth. Revenue increased 33% to $845.3 million. But an intraday gain of nearly 23% faded to a gain of 10.8% by the close. Sellers knocked the stock well off highs even after CrowdStrike guided revenue for the April-ended quarter slightly above expectations.

CrowdStrike Chief Financial Officer Burt Podbere reiterated the company’s goal of hitting $10 billion in annual recurring revenue by 2030.

Analysts polled by FactSet predict adjusted profit of 89 cents a share, up 57% year over year, with revenue up 31% to $904.6 million. Full-year earnings for its current fiscal year 2025 are expected to increase 27%, with 24% growth seen in 2026.

Watching Semtech

In the semiconductor space, Semtech has held gains well after soaring past a 24.57 entry in late March. A strong earnings report was the catalyst. Semtech bills itself as a provider of high-performance chips, cloud connectivity services and Internet of Things systems, known as IoT.

The company on March 26 reported an adjusted loss of 6 cents a share, with revenue up 15% to $193 million. Semtech also completed its $1.3 billion acquisition of Sierra Wireless, a provider of IoT connectivity solutions.

A little more than a year ago, Semtech unveiled several products for next-generation data centers.

“Optical solutions are vital to connect and enable high performance digital platforms. By improving networks at the chip level, Semtech is allowing our customers to prepare their networks for the exponential growth in data demands expected in coming years,” said Timothy Vang, a Semtech vice president, in the press release.

For the April-ended quarter, Wall Street sees Semtech reporting a loss of 23 cents a share, with revenue down 15% to $200.2 million. Analysts expect growth to ramp back up in the second half of its current fiscal year 2025.

Samsara Under Selling Pressure

Samsara, meanwhile, has come under selling pressure ahead of its earnings report due Thursday after the close. The company just turned profitable, helped by several quarters in a row of strong revenue growth.

Samsara got its start selling fleet management software in the transportation industry. The software helped customers monitor routes and vehicle performance so customers could operate more efficiently.

Last year, Samsara started targeting a new market — monitoring industrial equipment and government operations with its IoT platform, where data sensors and video cameras monitor activity at construction sites or factory floors.

For the April-ended quarter, analysts expect Samsara to report adjusted profit of 1 cent a share, with revenue up 33% to $272.4 million.

Options Trading Strategy

A basic options trading strategy around earnings — using call options — allows you to buy a stock at a predetermined price without taking a lot of risk. Here’s how the option trading strategy works, and what a call-option trade recently looked like for CrowdStrike stock.

First, identify top-rated stocks with a bullish chart. Some might be setting up in sound early-stage bases. Further, others already might have broken out and are getting support at their 10-week lines for the first time. And a few might be trading tightly near highs and refusing to give up much ground. Avoid extended stocks that are too far past proper entry points.

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A call option is a bullish bet on a stock. Put options are bearish bets. One call option contract gives the holder the right to buy 100 shares of a stock at a specified price, known as the strike price.

Once you’ve identified a bullish setup in the earnings calendar, check strike prices with your online trading platform, or at cboe.com. Also, make sure the option is liquid, with a relatively tight spread between the bid and ask.

Look for a strike price just above the underlying stock price — that’s out of the money — and check the premium. Ideally, the premium should not exceed 4% of the underlying stock price at the time. In some cases, an in-the-money strike price is OK as long as the premium isn’t too expensive.

Choose an expiration date that fits your risk objective. But keep in mind that time is money in the options market. Near-term expiration dates will have cheaper premiums than those further out. Buying time in the options market comes at a higher cost.

CrowdStrike Stock Option Trade

When CrowdStrike stock traded around 327.50, an out-of-the-money weekly call option with a 330 strike price and a May 31 expiration came with a premium of around $17.50 per contract. That was 5.3% of the underlying stock price at the time.

One contract gave the holder the right to buy 100 shares of CrowdStrike at 330 per share. The most that could be lost was $1,750 — the amount paid for the 100-share contract. To break even, CrowdStrike would need to rise to 347.50, factoring in the premium paid.

Keep in mind that this is not a trade for a smaller portfolio. The reason is that taking delivery of 100 shares of CrowdStrike stock in the above scenario would cost $33,000.

The expected move in the options market for Salesforce, based on the at-the-money strike price of 327.50, was about 37 points up or down. Investors find that by adding the at-the-money call premium and the put premium for the June 7 contract.

Follow Ken Shreve on X/Twitter @IBD_KShreve for more stock market analysis and insight.

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