Why You Should Buy the Dip on Oracle Stock

There’s reason to believe the software stock could add to its year-to-date positive price action

Sep 2, 2021 at 12:47 PM
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While Oracle Corporation (NYSE:ORCL) stock has cooled some since its mid-August all-time highs, the equity found a comfortable leg of support at its 40-day moving average, which has helped capture pullbacks in the past. Plus, ORCL sports an impressive 38% year-to-date lead, and there’s reason to believe the software stock could add to this positive price action, making now the perfect time to buy calls on ORCL.

ORCLwtchart

The security looks ripe for analyst upgrades, too. Of the 19 in coverage, 13 consider ORCL a “hold.” What’s more, the 12-month consensus price target of $81.67 is an 8.6% discount to current levels, meaning a few price-target hikes could be on the horizon as well.

An unwinding of bearish sentiment in the options pits could also put some wind at Oracle stock’s back. The security’s Schaeffer’s put/call open interest ratio (SOIR) of 1.10 stands higher than 93% of readings from the past year, indicating short-term options traders have rarely been more put-biased over the past year during this time.
 
The equity has shown underlying strength. Specifically, short interest has added 50% over the past five months, while ORCL has tacked on 25% in that same time period.
 
As we stated before, now looks like a perfect time to speculate on Oracle stock’s next move higher with options. The stock sports a Schaeffer’s Volatility Index (SVI) of 30%, which stands in the 31st percentile of its annual range, meaning options traders are pricing in relatively low volatility expectations at the moment. Lastly,  our recommended call has a leverage ratio of 9.1 and will double in price with a 10.3% rise in the underlying stock.
 
Subscribers to Schaeffer's Weekend Trader options recommendation service received this ORCL commentary on Sunday night, along with a detailed options trade recommendation -- including complete entry and exit parameters. Learn more about why Weekend Trader is one of our most popular options trading services.

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