Options Trade – Oracle Corporation (NYSE:ORCL) Calls 
Sunday, March 15, 2015

**OPTIONS TRADE: Buy the ORCL Jun 2015 40.000 call (ORCL150619C00040000) at or under $3.50, good for the day. Place a protective stop loss at $1.40 and a pre-determined sell at $6.00.

by Ian Harvey

March 15, 2015


Oracle Corporation (NYSE: ORCL), a provider of enterprise software and computer hardware products and services, will report the results of its recent fiscal third-quarter after the market close on March 17th . Analysts have forecast earnings of $0.69 per share, up a penny from the same period last year. The stock is down 7.8% on the year, which is very beneficial for this options trade.

The weakness in the overall market has given cause to the stock’s downward trend, more so then past earnings misses, but overall Oracle has held up quite well. A big reason why the stock has shown strength in recent years is its dominant position in enterprise software and database management systems. Globally, spending on IT infrastructure is expected to rise 2.4% during the current year, which plays right into Oracle's hands.

Analysts expect solid earnings growth from the company moving forward, and currently forecast 7% growth for the new financial year.

Technical Details

The stock had a trading volume of 18,405,393 shares. Oracle has a 1-year low of $35.82 and a 1-year high of $46.71. The stock has a 50-day moving average of $43.00 and a 200-day moving average of $41.00. The company has a market cap of $186.11 billion and a P/E ratio of 17.63.

Also, Oracle was the target of unusually large options trading last Thursday. Stock traders acquired 15,506 call options on the company. This represents an increase of approximately 137% compared to the typical daily volume of 6,556 call options.


Oracle last released its earnings data on Wednesday, December 17th. The company reported $0.69 earnings per share (EPS) for the quarter, meeting the consensus estimate of $0.69. The company had revenue of $9.61 billion for the quarter, compared to the consensus estimate of $9.50 billion.

During the same quarter in the previous year, the company posted $0.69 earnings per share. The company’s revenue for the quarter was up 3.5% on a year-over-year basis. Analysts expect that Oracle will post $2.95 EPS for the current fiscal year.

Positive Aspects

• Oracle enjoys a dominant position in the enterprise software and database management system (DBMS) software market. According to market research firm Gartner, global spending on IT infrastructure is estimated to grow 2.4% to $3.8 trillion in 2015. Among infrastructure, Big Data and digitalization initiatives are likely to contribute the majority of DBMS market growth. It is believed that Oracle’s leading position in the DBMS software market will make it the primary beneficiary of this increased spending.

• Oracle is gaining ground in its cloud business as is evident from its second-quarter performance, which fared better than salesforce.com. It is believed that the company’s partnership with cloud content management service provider, Box, will facilitate better management of their digital assets on Oracle Marketing Cloud. Going forward, the partnerships with Salesforce (CRM), Microsoft (MSFT) and NetSuite along with the recent acquisition of TOA Technologies should provide a significant boost to Oracle’s cloud-computing endeavors.

• Oracle’s long-term goal is to drive margin growth through the sale of differentiated and high-value technologies. The company is pursuing various strategies related to its hardware business, which are expected to drive growth going forward. The company is focusing on selling integrated high-end servers, storage and software systems to large enterprises. This will likely result in a more profitable product mix.

• To help organizations efficiently reach, target and engage global consumers on social media channels, Oracle announced that Oracle Social Cloud's Social Relationship Management (SRM) platform now supports Instagram and Weibo. With the new capabilities, Oracle helps organizations deliver the best possible customer experience by adding two of the world's fastest-growing social media platforms to the expanding lineup of social networks supported by the Oracle Social Cloud.

Analysts Opinions

Stock analysts at Credit Suisse set a $47.50 price objective on shares of Oracle stock in a report issued on Friday. The firm currently has a “buy” rating on the stock. Credit Suisse’s price target suggests a potential upside of 12.08% from the stock’s previous close.

The company has also been the subject of a number of other research reports:-

• Analysts at Stifel Nicolaus set a $49.00 price target on shares of Oracle and gave the company a “buy” rating in a research note on Friday.

• Analysts at Jefferies Group set a $41.00 price target on shares of Oracle and gave the company a “hold” rating in a research note on Friday.

• Analysts at Deutsche Bank set a $44.00 price target on shares of Oracle and gave the company a “hold” rating in a research note on Friday.

• Analysts at Barclays lowered their price target on shares of Oracle from $50.00 to $49.00 and set an “overweight” rating on the stock in a research note on Monday, March 9th.

• Sanford C. Bernstein & Co reiterated their outperform stance on March 04th, with a target price of $52, which represents an upside of 19.87% from the last closing price.

• Another research firm, Evercore ISI, maintained their hold stance on February 28th, with a target price of $45, which translates into an upside of 3.73%.

• Finally, Susquehanna Financial Group maintained their Positive stance on February 13rd, with a target price of $50.

Two research analysts have rated the stock with a sell rating, eleven have given a hold rating and eighteen have assigned a buy rating to the company. Oracle currently has an average rating of “Buy” and an average price target of $45.96.


The stock has an attractive valuation, with a P/E of 17, so a positive earnings report will bring strength back into the stock, which will help profit from the recommended options trade.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE: Buy the ORCL Jun 2015 40.000 call (ORCL150619C00040000) at or under $3.50, good for the day. Place a protective stop loss at $1.40 and a pre-determined sell at $6.00.

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