Options Trading News

November 29, 2012  Thu 12:20 PM CT

Oracle leapt at the open today, and option traders followed up by piling into the name.

optionMONSTER's Heat Seeker monitoring program detected the purchase of about 21,00 June 35 calls against open interest of 276 contracts. Most of the large blocks priced for $1.03 to $1.05.

Those long calls lock in the price where investors can buy shares in the maker of enterprise software. If it continues to climb, the contracts stand to inflate in value and generate significant leverage compared with the underlying stock price. (See our Education section for more on how options can be used to take positions more cheaply than by using common equity.)

ORCL is up 0.61 percent to $32 in afternoon trading. Shares have been pulling back since early 2011, but the stock has been trying to climb since the summer and is now finding support above its 200-day moving average. That could make some chart watchers expect further gains.

Total option volume is more than triple the daily average so far today, with calls dominating the activity. The puts that do trade are mostly sold, which reflects a belief that downside is limited.
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