Options Activity for Oracle (ORCL), Pfizer (PFE) and Schlumberger (SLB)
Wednesday, September 15, 2010



I hope that your trading is going well, as I know that members of S.O.M.E. are making the most of the market movements and their returns.



Today's newsletter includes a look at a rise in call trading on Oracle (ORCL), Pfizer (PFE) and Schlumberger (SLB). The purpose of this newsletter is to focus on stocks seeing heavy options trading and to give you a unique insight into each stock's sentiment backdrop.

Oracle (ORCL)

Oracle Corp. (ORCL) was the center of attention on Tuesday, as more than 66,400 contracts changed hands. This jump in volume was more than double the stock's average daily trading volume of 29,211 contracts, according to data from WhatsTrading.com. Furthermore, approximately 63% of the volume crossed the tape on the call side.



Sentiment is somewhat mixed toward the shares of ORCL at the moment. The International Securities Exchange (ISE) has seen a rise in put trading recently, as 1.5 puts have been purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 78% of all those taken during the past year.

On the other hand, the put/call open interest ratio (SOIR) for ORCL comes in at 0.73, which is lower than 75% of all those taken during the past 12 months. In other words, short-term options speculators have been more optimistically aligned toward the shares only 25% of the time during the past 52 weeks. Meanwhile, Wall Street is smitten with the shares. According to Zacks, the stock has earned 27 "buy" ratings, six "holds," and one "strong sell." This configuration leaves the security vulnerable to potential downgrades that could weigh negatively on the shares.

Technically speaking, the shares of ORCL are up more than 3% since the beginning of the year. The security recently rebounded from support in the 21.50 region, and climbed back above former resistance at its 10-week and 20-week moving averages. These trendlines had guided the shares higher from March 2009 through May 2010, and could now help usher the security through resistance in the 26.50 region.



Pfizer (PFE)

Options traders flocked to Pfizer Inc. (PFE) on Tuesday, as more than 170,200 contracts crossed the tape. This surge in volume was more than three times the stock's average daily trading volume of 52,322 contracts, according to data from WhatsTrading.com. In addition, roughly 72% of the volume changed hands on the call side, indicating a growing optimism.



Sentiment is mixed toward the shares of PFE at the moment. The ISE has seen an increase in put trading recently, as nearly one put has been purchased to open for every one call purchased to open during the past 10 trading sessions. This ratio of puts to calls is higher than 93% of all those taken during the past year, indicating that traders have rarely purchased puts over calls at a faster pace during the past 12 months.

Meanwhile, the SOIR for PFE comes in at 0.65, as call open interest nearly doubles put open interest among options slated to expire in less than three months. This ratio of calls to puts is lower than 57% of all those taken during the past year. In other words, short-term options players have been more optimistically aligned toward the shares only 43% of the time during the past 12 months.

Furthermore, Wall Street is enamored of the stock. According to Zacks, the security has earned 14 "buy" ratings and four "holds." Any downgrades from this group could create a fresh wave of selling pressure.

From a technical perspective, the shares of PFE are down 6% since the beginning of the year, but are beginning to show some interesting signs of life. The stock has rebounded from support at the 14 level and climbed back above its 10-week and 20-week moving averages. These key trendlines have served as both support and resistance in the past.



Schlumberger (SLB)

Options players picked up options on Schlumberger Limited (SLB) at a brisk pace on Tuesday, as more than 63,400 contracts changed hands. This surge in volume was more than three times the stock's average daily trading volume of 18,423 contracts, according to data from WhatsTrading.com. What's more, roughly 54% of the volume changed hands on the call side.



The ISE and Chicago Board Options Exchange (CBOE) have seen an increase in put trading recently, running counter to Tuesday's action on the call side. The 10-day put/call volume ratio comes in at 0.63, which is higher than 61% of all those taken during the past year.

Meanwhile, the SOIR for SLB comes in at 1.01, as put open interest outnumbers call open interest among options slated to expire in less than three months. This ratio of puts to calls is higher than 61% of all those taken during the past 12 months, indicating elevated levels of pessimism.

Only Wall Street remains resolutely optimistic about the stock's prospects. Zacks reports that the company has earned 25 "buy" ratings and three "holds." Any downgrades from this group could pressure the security lower.

Technically speaking, the shares of SLB are down more than 9% since the beginning of the year. The security has been grinding lower since it reached a near-term peak at 74 in April. The stock is now encountering resistance at its 10-week and 20-week moving averages.





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