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Tech Giant Oracle Has Big Quarterly Numbers and Stock Slides!! What are my Options?! By: Tim Bolger

German Sailing Grand Prix Kiel 2006. Team: BMW...

German Sailing Grand Prix Kiel 2006. Team: BMW Oracle Racing. (Photo credit: Wikipedia)

Oracle Corporation (ORCL): the business software and hardware global giant is sliding over 2% to $29.48(3:19 PM EDT) after it beat the streets quarterly earnings expectations after the closing bell on March 20, 2012 (Q3 results ending Feb 29th).

In morning trade, Orcl stock popped to an intraday high of $31.15 a share and then reversed course to the downside breaking the important technical of $30 a share. Nearly 80,000,000 shares have traded hands on this tech giant before 3:26 PM EDT on a day of huge volume, in which investors/analysts have a mixed sentiment on the financial results of the company. Oracle beat analyst expectations by a slight percentage, coming in with $9.04 Billion in revenue for the quarter.  The street had Oracle coming in with an estimated $9.02 Billion, which is only a small beat and may partially explain why the shares are sliding after a quick knee jerk pop to the upside this morning.

On a more positive note, Oracle had a very impressive gross margin of 78.9% and an operating margin of 37.8%. Non-GAAP earnings beat the street by 6 cents, coming in at $0.62 cents a share and the street had predicted Oracle to come in at $0.56 cents a share. Check out the chart below courtesy of Capital IQ to take a closer look at the Non-GAAP earnings results in more detail:


Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Despite the slide in Oracle shares today, I am still a raging bull when it comes to investing in this global technology giant. Larry Ellison is one of the smartest and richest Tech moguls on planet earth and I am very confident in the long term picture of continued profitability and share appreciation of this Bay Area Tech giant. I am maintaining my $37 price target for Orcl shares over the next 11 months and would be a buyer of the shares on this pullback.  I think this is short term storm for and pullback in Orcl shares and presents a great long term buying opportunity for new investors and those looking to accumulate more shares for their core positions. A great entry point in the stock will be at a share price of $27.50 or less. Now, what is the Option play?! I like the longer term Call options and selling the near term Put options on Oracle.

Trade#1: I would consider selling the Oracle(ORCL) $29 strike Put Option for $0.90 cents a contract with an April 20, 2012 expiration date. Attached is Oracle Options Chains with an April 20, 2012 expiration date courtesy of YahooFinance: http://finance.yahoo.com/q/op?s=ORCL&m=2012-04. If I sell 20 Orcl Put Options for $0.90 cents each, I will credit $1,800 into my brokerage account ($0.90 cents x 100 shares per contract=$90 and $90 x 20 contracts =$1,800).

Remember, by selling the Put options, we are taking the big risk of potentially being exercised on the shares of Oracle at $29, if shares of Orcl stock are trading below $29 on the expiration date of these contracts.  Therefore, we need to have $58,000 in cash in our brokerage account as cash collateral in the event that we get exercised on the 20 Put option contracts that we are considering selling. 20 contractsx$2,900($29 x 100 shares per contract)=$58,000. This is definitely not a trade for beginners, especially if you do not have the cash reserves to initiate the trade. However, I am a fan of this trade and a big long term bull on Oracle. In a worst case scenario, I am comfortable going long 2,000 shares of Oracle at $29 a share if I get exercised. By selling the Put options, I am in a sense financing $1,800 towards the potential eventual purchase of 2,000 shares of Oracle at $29 per share. By selling the Put Options, I am actually getting long the stock at $28.10 (net cost of $58,000-$1,800 credit=$56,200)because of the $1,800 that was initially credited to my brokerage account at the opening of this derivatives transaction.

Trade #2: I would consider buying the Oracle(Orcl) $29 strike Call Options with a Sept 21, 2012 expiration date for $1.25 a contract. Attached is the Orcl Options Chains with a Sept 21, 2012 expiration date courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=ORCL&m=2012-09. I can buy 20 contracts for $2,500($125 per contract of 100 shares x20 contracts= $2,500 to open this trade) and that will give me long exposure on 2,000 shares of Orcl stock at $29 a share for the next several months. If the stock trades to $35 by the September expiration date, my initial $2,500 investment will be worth over $12,000. That would be beautiful return on our capital and I think that Tech stocks continue to lead this market rally higher in 2012!!! Lets go Orcl Bulls!! Remember, we need Orcl stock to decline another  5 or 6% in order for us to get an opportunity to buy these September 2012 Call Options for $1.25 a contract. Options take alot of patience and discipline to be successful in making money. Please remember to consult your investment advisor before buying or selling any equity securities/stock options. Good luck and stay tuned for more big action at http://www.Optionshoney.com.

Honey?! Lock in Some Profits on Oracle Call Options?! By: Tim Bolger

Deutsch: Oracle-Zentrale in Redwood Shores.

Image via Wikipedia

I have been a long term bull on the Oracle Corporation(ORCL) and love this company… Earlier this week , I recommended that Options honey readers consider buying the Mar 16, 2012 expiration $30 strike Call Options on Oracle (ORCL) for .20 cents(.20 x 100 shares per contract=$20 a contract plus trading fees). Oracle is trading up 1.23% at 29.61(11:21 AM EST) and the March 16, 2012 $30 strike Call Option contracts have gained almost 100% in value. Attached is the March 16, 2012 expiration $30 strike ORCL Call Option courtesy of Yahoo Financehttp://finance.yahoo.com/q?s=ORCL120317C00030000
You might want to consider selling 40% of your position to lock in a big gain at .40 cents a contract(.40 x 100 shares per contract=$40). That would be a quick gain of $800 minus trading fees. That’s nice!! Lovin’ that Honey…I mean Money!! If you bought 100 contracts, you will still have 60 contracts remaining in order to profit huge from the potential move in the stock above $30 in the next few trading days. I reiterate my $37 2012 price target on Oracle shares and strongly believe that if the stock breaks 30, it will run into the low 30s very quickly.

Good luck Oracle Bulls & Stay Tuned to http://www.Optionshoney.com!!

Technology Stocks Move Higher!! Oracle Options Honey?!! By: Tim Bolger

Oracle Headquarters Redwood Shores

Image via Wikipedia

Oracle Corporation world HQ

Image via Wikipedia

I’ve been a long term bull on Oracle Corporation and believe that it is one of the best run companies on the planet…It has some of the highest gross margins and cutting edge software products on the planet as well…To put the icing on the cake, it is run by CEO and Co-founder Larry Ellison…Ellison dominates the Technology business software sector and almost everything he touches turns to Gold…Attached is my post on Oracle Corp earlier this year:


After a huge run up in the Nasdaq, Oracle has lagged over the past 6 months and I believe that it is starting to get footing and will climb higher…I am a buyer of the stock under $29 a share and I have a $37 twelve month price target on this Tech stock…It is definitely a great stock to park alot of cash into, especially if the markets get very volatile again.  Any pull backs in the stock are excellent opportunities for long term investors to add to their core positions in Oracle shares.  I am watching the Call Options on Oracle very closely and have been monitoring the stock for several years…Remember, Options take patience/precision and are not suitable for all investors.  I often cost average my purchase of Options contracts, just like I would buying shares of a company. I rarely ever back up the truck all at once when buying Options contracts because I do not have a crystal ball that perfectly predicts short term bottoms in stocks and overall market indexes.  So what am I buying?! Options honey?!

Over the past few weeks, I have been diversifying my portfolio with Options contracts on several Technology companies including Juniper (JNPR) and Nuance Communications (NUAN) to name a few…

Oracle Options Honey?!

Trade#1:  I am looking at buying the Oracle (ORCL) March 16, 2012 $30 strike Call Options for .20 cents a contract. 100 shares per Options contract x .20 cents= $20 per contract plus trading fees. Attached is the Mar 16, 2012 expiration Options chains for Oracle Corporation courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=ORCL+Options. For $1,000 plus trading fees, I can purchase 50 contracts on ORCL with a $30 strike price. If the stock trades to $31 in the next 3 weeks, my 1k will be worth over $5k. My goal is for the stock to trade to $32, and 1k will be worth 10k for example…I believe ORCL is in an uptrend and if it breaks $30, the stock will run quickly into the low 30s. Good luck to all of the Oracle Bulls!! Remember that options are high risk financial instruments and are not well suited for all traders or conservative investors. Please see the optionshoney.com disclosure and please consult your investment advisor before buying or selling any options/equity securities.

Trade#2: For the longer term bull on Oracle(ORCL), I would think about buying the ORCL Sept 21, 2012 expiration $31 strike Call Options for $1.35 a contract. Attached is the Sept 21, 2012 expiration Options chains courtesy of Yahoo Finance: http://finance.yahoo.com/q/op?s=ORCL&m=2012-09. If the stock trades to $35 by the September expiration, you will almost triple your money…Stay tuned for more options action at Optionshoney.com.

Larry Ellison and The Global Enterprise Software Giant: Oracle Corporation!! What is the Options Play Honey? By: Tim Bolger

Oracle (Orcl) is one of the most powerful software companies on the planet and we all know the man behind the helm who has been most influential in taking this business software powerhouse to where it is today…Yes, that remarkable man is billionaire Larry Ellison (Co-Founder and Ceo of Oracle) and a business legend (In 2011, Forbes ranked Ellison as the 5th richest man in the world) that I admire for his brilliance, innovation, and competitive nature.  Ellison has built one of the most successful Technology companies in the world and he has a continual hunger to get larger, more powerful, and more profitable all the time.  Oracle’s Ellison has spent over $40 billion in the last decade acquiring and gobbling up both competitors and smaller companies to add to the stellar suite of Oracle companies and software products.  Currently, Ellison is attempting a hostile takeover of Peoplesoft and is always mining for additional acquisition targets that he sees fit for Oracle’s continued growth and gaining a competitive advantage in the marketplace.

Ellison is not only extremely competitive in the business world, but in “all other walks of life,” such as his love for racing sail boats. Ellison and his team were the recent winners of the America’s cup and brought the cup back to his hometown yahting club in lovely San Francisco.   Competitive sailing, just like running one of most successful technology companies in the world, is a way of life for this Tech mogul.  Ellison is determined to win the next America’s Cup being raced in San Francisco…To attempt achieving this goal, he built a custom $100 Million sailboat.  Yes, he built a pretty nice boat by all standards.  And, he likes to win and win alot…winning makes him and other powerful players alike feel good and he loves the adrenaline rush. After all, when you have over $30 Billion, you can buy whatever you want on earth(he owns fighter planes, helicopters, the second largest yacht in the world(The Rising Sun and is 452 ft 8 inches), sports cars, several gorgeous estates/mansions around the world, a beautiful place on San Francisco’s Billionaire’s row, etc.) and it is more the game of continual winning than needing any more cash…But, who can blame the guy if he wants to surpass Mexico billonaire Carlos Slim‘s wealth someday and be worth $80 billion someday.  I definitely know that if he more than doubles his current wealth in his lifetime, that will be very good for both long term Oracle shareholders and Ellison’s personal Oracle fortune (Ellison is by far the largest Oracle shareholder, with a majority of his wealth held in the company’s shares).  As of Jan 5, 2011 Ellison owned over 1.1 billion Oracle Shares. Wow!! It is always important to know how large the stakes of insiders are and the institutions that own the shares of the companies that we might invest in.  I especially like to see when a founder, such as Ellison has a majority of his wealth on the shares. It is usually a bullish signal for longer term investors and means that Ellison feels the best investment is investing in himself(the quarterback) and the future of his company Oracle…

Say Hello to Larry Ellison’s Private Mega Yacht the “Rising Sun”:

Rising Sun

Courtesy of:  http://www.wirecyber.com/2009/04/18/world-class-luxury-cruise/

One of Ellison’s favorite quotes was by Genghis Khan: “It is not sufficient that I suceed – all others must fail.” That is clearly a quote that Ellison has lived his life by and this business mogul continues to divide and conquer to achieve his personal goals and business goals for Oracle shareholders.  Personally, I have been monitoring Oracle’s stock for over 3 years and think there is definitely great upside potential in the stock and equity options for Oracle investors.

The opportunity for our Options play just got even better for us in Dec 2o11.  Oracle’s stock plunged 10% on high volume(over 180 million shares traded hands) after missing Wall St. analysts top line revenue forecasts in its latest quarterly earnings report in Dec 2011.  I believe the revenue miss and share pullback was just a temporary bump in the road for Oracle shareholders and presents longer term investors with a great opportunity to add to their core position in the shares.  So let’s look at the Options alternatives here:

Options Trade#1:  I like selling the Orcl Mar 16 2012 25 Put Options for .75 cents.  Keep in mind that the ask right now on these contracts is .51(the ask is what a seller is willing to sell them for currently) and a bid of .49, so we need the stock to decline 4-5% in order to get the Put options to a level at which I am looking to sell them to collect the options premium. As I will continue to educate on Optionshoney.com, selling or buying Options at the current Market price is often not a good idea and we need to be patient for the best time to make our trade.  If the Put Options increase to .75 cents and I were to hypothetically sell 20 contracts, I would receive a credit of $1,500 to my brokerage account.  I love Oracle shares for the long term and I am comfortable getting long the stock at 25, if I get exercised on the shares. I will get exercised only if Oracle shares are trading below $25 at Mar 16, 2012 expiration.  If I wanted to place this trade, I would first need $50,000 in cash in my account as collateral in case I get exercised($25 share price x100 shares per options contract=$2,500, so if I get exercised on 20 contracts, that equals 20 x $2,500=$50,000). I like this trade, because I think the recent big sell off in Oracle shares was overdone to the downside as a result of a weaker Dec 2011 quarterly report than Analysts had forecasted. I believe Orcl shares will trend higher or sideways over the next few months and anticipate a stock price close higher than $25 by the March expiration of the contracts. If I get exercised on the shares, selling the 20 Put contracts will reduce my gross purchase cost of 2,000 Orcl shares at $25 per share from $50,000 to $48,500($50,000-$1,500 premium collected for selling the 25 strike Put Options).  If Orcl shares trade to 40 in the next 18 months and I get exercised on the Orcl puts I might sell, this trade hypothetically costing me $48,500 will be worth $80,000 at 40 a share.  I would be very happy with those potential returns and believe Oracle is well positioned in the global Technology arena to continue its growth and profitability.  Of course, Options are very risky and I do not have a crystal ball as to the future of the markets or any outcome of my hypothetical Options trades, so please make sure to consult your financial advisor before buying/selling any options or making any stock investments. The Optionshoney.com  disclaimer.

Options Trade#2:  If I were to make a more bullish longer term bet on Oracle shares, I would think about purchasing the Orcl Jan 18, 2013 30 Call Options for $1.65 on a pullback in the current levels of Oracle stock. Oracle closed Friday at $27.34 and the ask on these Jan 13 contracts was $2.44.  Remember timing and patience is key to setting up the perfect options trade.  We need Orcl stock to decline from current levels to around $25 to be able to purchase the Call options for my desired price…The beauty of this trade is that I do not need any money as collateral to purchase the shares and just need the money to purchase the Call Options. As I demonstrated in Options Trade#1, we needed tens of thousands of dollars in collateral to execute the trade.  In options trade#2, my total financial risk is that the contracts could expire worthless at expiration and I would lose $1,650 plus trading fees. So, If I were to purchase 10 contracts at $1.65, it would cost me 1.65 x 100 shares per contract=$165. $165 x10 contracts=$1,650 plus trading fees.  For $1,650 plus fees an Orcl bull can get long exposure to 1,000 shares of stock at an exercise price of 30 and we have almost a year for the shares to rise. If Orcl runs to 40 in the next 12 months, our $1,650 trade will be worth over $10,000. Well, that would be excellent in a perfect world and be over a 600% return on our initial $1,650 invested in the Call Options…The beauty here is that we only risked $1,650 to potentially make $10,000.  Now let’s put the actual cost of purchasing 1,000 shares of Oracle stock, which have no expiration date in perspective. For us to purchase 1,000 shares today, it would cost us $27,340 plus trading fees.  This is an example of how Call Options can give you great leverage for only a small fraction of the cost of purchasing the actual stock to get in the game!!! Optionshoney disclaimer.  Check out the five year chart on Oracle Corp below, courtesy of YahooFinance. Notice the huge volume at the bottom of the chart on Oracle’s recent quarterly earnings report. Till next time.    —Timmy B

Chart forOracle Corporation (ORCL)

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