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Oracle Corporation (ORCL): Option Traders Brace for an Earnings Miss

ORCL's December 34 put was popular on Monday

by 12/3/2013 10:04 AM
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Option Brief: Put players set their sights on Oracle Corporation (NYSE:ORCL) yesterday, with the contracts trading at three times the average daily volume. Amid this increased demand in the options pits, ORCL's 30-day, at-the-money implied volatility (IV) rose 1.0 percentage point to 24.0% -- its loftiest perch since mid-September.

The most active strike by far was the December 34 put, which saw 26,528 contracts change hands -- including several large blocks -- and according to Trade-Alert, a number of these positions were purchased for a volume-weighted average price of $0.46 apiece. IV at the strike rose 4.2 percentage points, open interest soared overnight, and data from the International Securities Exchange (ISE) confirms buy-to-open activity. In other words, the speculators expect ORCL to fall south of the $34 mark over the next several weeks.

This time frame encompasses the tentative release date of ORCL's fiscal second-quarter earnings report. The equity has experienced some wild price swings following its quarterly announcement, and in both March and June, shed more than 9% in the subsequent session. From a broader technical perspective, Oracle Corporation (NYSE:ORCL) hasn't fared too well on the charts, with the stock up a slight 5% on the year to trade at $34.97.


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