Shares of Oracle (NASDAQ: ORCL, Stock Forum) are up more than 28% to $17.80 from their 52-week low close of $13.85 on March 9. The shares have rallied more than 12% today as the company announced better-than-expected earnings last night. Yesterday, we saw at least one investor expressing a bullish view buying calls looking for a potential bump in the stock.
Looking at the April 16 calls, we find that more than 43,000 traded in the first four hours of trading Wednesday. Open interest in these calls was 6,858 at the time, according to the Sidewinder report at www.ONN.tv. What is most noteworthy about this volume is that most of the activity was on the buy side, meaning there were more buyers of these calls than sellers.
As we mentioned, this buying activity could have been a bet by an investor that shares of ORCL would continue to run if the earnings announcement had positive data. The call options traded are 70 cents with the stock near $15.7. At that price, the buyer just needed the stock to be above $16.70 to be in-the-money at expiration. Given that ORCL shares closed at $16.83 as recently as February 19, this might be part of the reason why the investor found these options to be attractive.
As we can see from the move in the shares today, these call options were profitable for the buyer. The calls have already traded more than 23,000 times today, and most of the activity has been on the sell side.The options are trading for near $1.90 with the stock around $17.65. It is likely that this is the same buyer as yesterday, taking a quick one-day profit of more than $1.20 per call contract.