Oracle (ORCL) put volume spikes on buying

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Heavy put volume in Oracle Corp. (NASDAQ: ORCL ) crossed the tape during morning trading thanks to an investor who appears to have expressed bearishness on the application software company. The December 24 puts were active during morning trading, and the majority of the action looks to be on the buy side.

Between 10:46 a.m. EDT and 10:47 a.m. EDT, several blocks of these longer-dated puts changed hands versus current open interest of 4,000 contracts. It looks like the majority of these blocks were traded to open, suggesting most investors expressed bearishness on ORCL. The earliest block of the December 24 puts crossed the tape for $1.48 per contract while the most recent block traded for $1.52 per contract. These prices were closer to the ask price when the volume hit the tape, indicating investors were willing to commit a hefty amount of capital to bet on downside in ORCL during the next four months.

The premium paid per contract represents the maximum loss on this long put position. If ORCL drops at least 7% (using an average premium of $1.50 per contract) and is trading below the strike price prior to December options expiration, the investor makes money on this bearish trade. If ORCL is trading between the strike price and the breakeven level of $22.50, the investor takes back some of the debit. In the event that ORCL drops all the way to zero at expiration, the investor could make a maximum profit of $22.50 (the strike minus the premium paid).

Shares of ORCL dropped more than 1% to $24.20 during morning trading without any news from the company. The stock is trading roughly 9% lower than its 52-week high of $26.60, and it looks like one investor expects the stock to move away from the high levels throughout the rest of the year.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Options

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Karla Yeh

Karla Yeh

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