Mike Khouw gives the trading set-up on Oracle ahead of earnings.
While most of the S & P 500 has reported first quarter earnings, three notable names — where the options trade quite actively — have yet to report. One of those is Oracle and I will show how one could trade it here. Oracle Corp , which is scheduled to report on June 11 after the close, is of significant importance as it could potentially influence trading strategies. Following this, Broadcom Inc . will report on June 12th after the close, and Adobe Inc. on June 13th after the close.
will need to rise nearly 5% for those calls to break even. However, the elevated premium is understandable given that the most recent 3 of the past four quarterly earnings releases saw double-digit moves. So, options traders are generally bullish. Sell-side analysts are mostly bullish with 21 buys, 15 holds, and one sell with an average analyst price target of nearly $139, just over 13% higher than the current stock price. The trade I'm willing to play along, but I have two caveats.
YTD mountain Oracle, Year-to-date A more cautious approach to a bullish bet on Oracle could be to buy call options. For instance, the September $125 calls not only capture next week's earnings, but are also likely to capture the subsequent earnings, estimated for the second week of September. One could offset a portion of this cost by selling a June 14th weekly $130 call.
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