Unusual Options Activity: Oracle (ORCL)

Shares of software database company Oracle (ORCL) have recently dropped slightly from all-time highs around $80 per share. One trader sees shares rebounding in the coming months.

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  • That’s based on the December $80 calls. With 235 days until expiration, over 2,290 contracts traded, an 18-fold rise in volume from the prior open interest of 130. The buyer of the option paid about $4.00 for the contract.

    With shares around $75, the option would move in-the-money on less than a 10 percent rally in shares. That would also put shares back at their all-time high.

    The company has had a strong year, growing earnings by 95 percent and sporting a fat 32 percent profit margin. While some traders had hoped the company would announce it was adding Bitcoin to its balance sheet in the first quarter, such a move may occur later in the year, and could fuel a rally in shares above and beyond the company’s strong earnings.

    Action to take: Investors may like shares here, as the company has been massively increasing its dividend lately, going from $0.96 last year to $1.28 this year.

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  • For traders, the December calls strike a reasonable balance between the current price and a prospective future price. Should shares rally to $90, the $80 calls would be worth $10 at expiration, for a 150 percent profit from a current price near $4.


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