Unusual Options Activity In Oracle $ORCL

| September 2, 2015 | 0 Comments

Unusual Trading VolumeUnusual Options Activity In Oracle $ORCL 

As many of you know, unusual options activity can be a valuable indicator as to what traders are thinking, and more importantly, where these stocks are heading in the short-term.

This is something professional options traders pay a lot of attention to, and for good reason…  Unusual options activity can “tip off” big moves in a stock, either up or down.

So let’s take a look at some ‘interesting’ activity that caught our eye this week…

Oracle $ORCL is the biggest database provider in the world.  The company generates nearly $40 billion in revenues and $10 billion in profits per year.  For a good description of the company, follow the link.

$ORCL is trading at $36.01, down 19% for the year.  That’s 22% below the 52-week high and just 2% from the 52-week low.

So what does unusual options activity in ORCL tell us?

When the stock market sells off as much as it has lately, it’s hard to separate overall market action from individual stock dynamics.  In other words, if a stock is falling because of something company-specific, we’d never know due to the broad market action.

In the case of Oracle, the company was already having a less than stellar year even before the correction.  Increased competition in the global database market has been taking its toll on the company’s bottom line.  The stock was already 13% from its 52-week high before dropping another 9% over the last month.

Here’s the deal…

This week, a trader bought a large block of weekly puts in ORCL.  Keep in mind, a put option makes money when the underlying stock moves lower.

Specifically, a trader purchased 6,200 35.50 puts for about $0.18 each, expiring at the end of this week (September 4th).  The total cash outlay for this trade is roughly $111,000.  Breakeven point for the trade is $35.32.  Given the open interest, this trade is clearly an opening position.

Here’s the chart of $ORCL:

unusual option activity, a chart of ORCL

ORCL has plunged below the 50-day average the past week or so due to the correction in equity markets.  At the moment, the stock is only 2% from its 52-week low after taking another sharp downturn this week.

This trade suggests that ORCL may keep on falling and set a new 52-week low.  Although the option only costs $0.18, it is relatively close to the money.  The share price need only fall another 2% for the trader to start making money on the puts.

Given the recent volatility in the market, it’s very possible this short-term put trade could make money before Friday’s expiration.  What’s more, given the very short time until expiration, these puts are likely being used for speculation and not hedging.

More Options Trading Ideas…

Keep in mind, there’s a lot more unusual options activity going on than what we discuss here.

We just try to bring you what we feel are the most significant ones– and the ones you might actually be able to make some money on!

Yours in Profit,

Gordon Lewis

Note:  Gordon Lewis has been trading options for more than 15 years and he now writes and edits for Optionstradingresearch.com.  You can sign up for the newsletter and get a free research report. We are your go-to source for top notch options trading research.

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Category: Unusual Options Trading Activity

About the Author ()

Gordon Lewis is the Chief Investment Strategist and editor for the popular daily newsletter – Options Trading Research. He’s also editor of our dynamic theme-based options trading service, Advanced Options Adviser, and one of the key analysts behind the highly successful Options Trading Wire.