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Put Traders Play Both Sides of the Fence on Oracle Corporation (ORCL)

ORCL puts have seen a mix of buy- and sell-to-open activity of late

by 8/23/2013 1:45 PM
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Oracle Corporation's (NYSE:ORCL) time on the charts over the past three years has been tepid at best, with the stock churning in the $26-to-$36 range since September 2010. With the equity currently trading at $31.99, it is sitting just 1.3% above where it was 12 months ago. Against this backdrop, speculators have shown a preference for puts over calls in ORCL's options pits.

Jumping right in... At the International Securities Exchange (ISE) and Chicago Board Options Exchange (CBOE), 7,914 puts have been bought to open on ORCL during the past five sessions, compared to 2,266 calls, resulting in a bearishly biased put/call volume ratio of 3.49.

Expanding the timeframe to two weeks and including data from the NASDAQ OMX PHLX (PHLX), the stock sports a 10-day ISE/CBOE/PHLX put/call volume ratio of 2.01 -- a marked rise from the Aug. 1 reading of 0.69. What's more, the current ratio ranks in the 96th percentile of its annual range, suggesting puts have been bought to open over calls with more rapidity just 4% of the time within the past year.

However, looking elsewhere reveals that option traders have not only been initiating long puts on ORCL, but they've also done their fair share of writing puts in recent weeks. In fact, throughout the last 10 sessions, speculators have sold to open 1.12 puts for each one they've bought.

In the front-month series, specifically, a heavy accumulation of put open interest resides at the September 30 strike. A number of these contracts are short positions, indicating traders expect this round-number mark to hold as support over the next several weeks. Meanwhile, the stock's 30-day, at-the-money implied volatility has been on the rise recently, moving to its current perch at 26.1% (roughly a two-month high) from its Aug. 9 reading of 20.1%.


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