With Earnings in Focus, Oracle Corporation (ORCL) Bears Up the Ante

Oracle Corporation will report earnings after this Wednesday's close

by Karee Venema

Published on Dec 15, 2014 at 1:17 PM
Updated on Jun 24, 2020 at 10:16 AM

Put players have been increasing their presence in Oracle Corporation's (NYSE:ORCL) options pits, ahead of the company's upcoming turn in the earnings confessional. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), for example, ORCL's 10-day put/call volume ratio of 1.00 ranks in the 74th annual percentile. In other words, puts have been bought to open over calls at a faster-than-usual clip in recent weeks.

Echoing this put-skewed trend is ORCL's Schaeffer's put/call open interest ratio (SOIR) of 1.07, which sits higher than 83% of similar readings taken in the past 12 months. Simply stated, short-term speculators are more put-heavy than usual toward the shares.

In the front-month series, specifically, a lofty accumulation of put open interest is found at the December 40 strike, where 7,614 contracts are currently in residence. Such a heavy amount of put open interest can often serve as support for a stock, as the hedges related to the bets begin to unwind ahead of expiration. This theory is evident today, with ORCL taking a sharp bounce off the round-number $40 mark -- a level that roughly coincides with its 40-day moving average -- to trade up 2.8% at $41.08.

Also helping the stock is an upgrade to "overweight" from "equal weight" at Morgan Stanley. Additionally, the brokerage firm boosted its price target on the shares to $50 from $45, citing an upbeat outlook for cloud app growth next year. As touched upon, Oracle Corporation (NYSE:ORCL) will unveil its fiscal second-quarter earnings report after Wednesday's close, with Wall Street calling for a per-share profit of 68 cents.

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