Oracle reports earnings after the market closes on Wednesday
Oracle Corp (NYSE:ORCL) stock is up 2.6% to trade at $178.47 today, thanks to three price-target hikes, including two to $200 from Jefferies and BMO. The San Francisco-based software giant boasts a market cap just under half a trillion, and can seemingly do no wrong ahead of the company's fiscal fourth-quarter earnings report, due out after the close on Wednesday, June 11. Leading up to the event, options traders are betting on more gains.
ORCL has a varied history of post-earnings moves. The stock shed 3.1% and 6.7% after its last two earnings reports in March and December. Prior to that though, the equity had gapped higher by double-digit percentage points after three-straight earnings reports. Overall, the shares average a post-earnings move, regardless of direction, of 9.1% after the last eight reports. This time around, the options market is pricing in a larger-than-usual post-earnings swing of 12%.
The stock has staged quite the V-shaped rally since its April 7 12-month lows of $118.86, up 50% off that bottom. Despite the 42% year-over-year lead, 14 of the 34 brokerages are on the sidelines with tepid "hold" ratings, while the consensus 12-month price target of $182.34 is only a 2% premium to its current perch. With this in mind, an upbeat post-earnings reaction could spark a wave of overdue bull notes.
Options traders have been loading up on calls, per ORCL's 50-day call/put volume ratio of 2.51 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) ranks in the 86th percentile of its annual range.
Even with earnings looming, now (and later this week) might be a good time to weigh in with options, too. ORCL's Schaeffer's Volatility Scorecard (SVS) of 95 out of 100 means it has exceeded options traders' volatility expectations over the past year.