Trader sees Oracle trapped in a range

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Oracle has been one of the strongest large-cap tech stocks in the last year, but one investor sees the gains slowing.

optionMONSTER's screening programs detected the sale of 6,500 December 29 puts for $1.18 and the 6,500 December 37 puts for $1.99. Volume was more than 85 times open interest in both strikes.

The trade, known as a short strangle, produced a credit of $3.17, which the investor will keep if ORCL closes between $29 and $37 on expiration. (See our Education section)

ORCL rose 1.88 percent to $34.75 on Thursday and has delivered almost twice the gain of the Nasdaq Composite index since the beginning of 2011. The database company has benefited from a series of successful acquisitions, a rebound in technology spending and a shift toward software subscriptions. The last earnings report on March 25 beat estimates on the top and bottom lines.

Thursday's strangle seller apparently thinks that a lot of the good news is already priced in for ORCL and anticipates the pace of its rally to slow. He or she may also expect it to remain below $37 because that level offered support and resistance as the shares were churning at the end of the tech bubble in 2000. (See this story for more on how investors use chart analysis to craft such trades.)



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

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: ORCL

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