Oracle got pounded last week on worries it might get smacked by
the federal government with $1 billion of legal costs, but now the
bulls are coming back.
optionMONSTER's Heat Seeker tracking system detected the purchase
of about 10,000 January 25 calls for $0.90 and the sale of a
matching number of January 19 puts for $0.72. The trade cost
$0.18 to implement and will mimic a long position in the
ORCL is up 0.9percent to $22.87 in morning trading, following a 7
percent drop last week amid bearishness in the technology sector.
The recent selling, which was accompanied by a flurry of bearish
put activity, drove the shares back to the middle of the range
they've followed since late May.
The company's last earnings report on June 24 was better than
expected, though revenue was only in line with forecasts. Last
week's declines coincided with a Justice Department investigation
into whether it overcharged the government.
Today's option trade, known as a bullish combination, will provide
significant leverage to the upside if ORCL closes above $25 on
expiration but will lose money below $19. The options will expire
worthless of the shares remain between those two levels.
(Chart courtesy of tradeMONSTER)