Unusual Options Activity: Oracle (ORCL)

Database firm Oracle (ORCL) has been a strong tech performer, with shares up 47 percent over the past year. One trader sees that trend continuing in the short term.

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  • That’s based on the June 30th $115 calls. With 21 days until expiration, 9,417 contracts traded compared to a prior open interest of 197, for a 48-fold rise in volume on the trade. The buyer of the calls paid $1.18 to make the bullish bet.

    Shares recently traded for about $107, so they would need to rise about $8, or 7 percent, for the option to move in-the-money. With a 52-week high of $107.60, and just a few weeks for the trade to play out, that may prove a bit aggressive.

    Besides the strong share price performance, Oracle has been increasing its revenues 18 percent over the past year. The company is continuing to transition toward a recurring revenue database and software service business, and the early results are promising.

    Action to take: Oracle is clearly in a strong uptrend. Investors might want to consider a small stake now, and add to it on a pullback. The company has been a dividend growth player, with a recent starting yield of 1.5 percent.

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  • For traders, playing to the current uptrend looks reasonable. The June puts can potentially deliver mid-double-digit gains in the coming weeks. Bullish traders may get a higher percentage return with options that are further out-of-the-money.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.