Oracle Stock Pulls Back Despite Earnings Win, Bull Notes

The security sports attractively priced premiums at the moment

Digital Content Manager
Mar 11, 2021 at 11:02 AM
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The shares of Oracle Corporation (NYSE:ORCL) are down 6.6% at $67.36 at last check, despite the tech giant reporting better-than-expected fiscal third-quarter earnings of $1.16 per share -- higher than Wall Street's estimates of $1.11 per share -- as well as a revenue beat. And while its cloud division missed expectations, the company attributed the upbeat results to strong demand for its cloud computing services, as remote working became more prevalent during the Covid-19 pandemic.

Despite this morning's dip, the brokerage bunch is responding with optimism. The security earned at least five price-target hikes this morning, including one from Monness Crespi Hardt to $93 from $82. It also received one price-target cut from BMO to $79 from $80. Analysts were skeptical towards ORCL coming into today, with 14 of the 22 in coverage carrying a tepid "hold" rating, while eight say "buy" or better. Plus, the 12-month consensus target price of $68.82 is a slim 3.6% premium to current levels.

Just yesterday, the equity nabbed a fresh all-time high of $73.60. And while shares are now cooling off, the 60-day moving average has been a consistent source of support, and looks poised to contain today's pullback. Year-over-year, ORCL is still up 48.8%.

Meanwhile, the options pits are firmly in the bullish camp, with calls popular. This is per the stock's 50-day call/put volume ratio of 4.91 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits higher than 92% other readings from the past year. In simpler terms, calls are being picked up at a faster-than-usual pace.

Drilling down to today's options activity, 44,000 puts and 72,000 calls have crossed the tape already, which is seven times the intraday average. Most popular is the 3/12 67-strike call, followed by the 65-strike put in the same weekly series, with new positions currently being opened at both. 

Now could be a great opportunity to weigh in on ORCL's next move with options. The stock's Schaeffer's Volatility Index (SVI) of 42% sits in the relatively low 20th percentile of its annual range. This means the security sports attractively priced premiums at the moment. 

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