Options Brief: Oracle (ORCL)

ORCL – Oracle Corp. – Investors are employing a number of diverse options trading strategies, some bullish and others bearish, on the software company this afternoon. Oracle’s shares are currently up 0.70% at $22.64 as of 12:30 pm ET, but earlier increased 2.05% to an intraday high of $22.94. Near-term sentiment on the software developer looks fairly bullish with investors picking up approximately 7,200 calls at the September $23 strike for an average premium of $0.37 each. Investors buying the calls outright are prepared to make money if Oracle’s shares rally 3.2% over the current price of $22.64 to exceed the average breakeven price of $23.37 by September expiration. Optimism spread to the higher September $24 strike where it looks like traders purchased 1,500 calls at an average premium of $0.10 apiece. Traders long the higher-strike calls are poised to profit should ORCL shares increase 6.5% in the next couple of weeks to surpass the breakeven point to the upside at $24.10. We note that open interest at the September $23 and $24 strikes is sufficient to cover call volume traded during the session so far, which suggests buyers could potentially be closing short positions rather than initiating outright bullish bets on the stock. Finally, Oracle Corp. puts were also in use today by investors populating the January 2011 contract. It looks like some traders employed debit put spreads, buying about 3,000 puts at the January 2011 $22.5 strike for premium of $1.61 each, and selling roughly the same number of contracts at the lower January 2011 $20 strike at a premium of $0.76 apiece. Net premium paid to establish the bearish spread amounts to an average of $0.85 per contract. Thus, put players are positioned to profit if Oracle’s shares reverse course and decline 4.4% to slip beneath the average breakeven point at $21.65 by expiration day next year.

About Andrew Wilkinson 1023 Articles

Affiliation: Interactive Brokers

Andrew Wilkinson is the senior market analyst at Interactive Brokers Group, where he provides daily commentary and analysis on U.S. equity options trading throughout the trading day. Andrew provides webinars designed to explain option-related trading scenarios covering futures, fixed income, forex and equities.

Interactive Brokers: Interactive Brokers offers direct market access to around 80 electronic global markets from a single account. Successful traders and investors understand that superior technology and lower trading costs can result in greater returns. For 32 years we have been building direct access trading technology that delivers real advantages to professionals worldwide. With consolidated equity capital of US $4.4 billion, IB and its affiliates exceed 1,000,000 trades per day. In addition, our prudent and conservative risk policies make Interactive Brokers a safe haven for your money. Discover some of the reasons why IB, the largest independent US broker/dealer, is the professional traders' and investors' choice.

Visit: Interactive Brokers

Be the first to comment

Leave a Reply

Your email address will not be published.