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July 3, 2013  Wed 3:47 AM CT

ORCL: SEE CHART GET CHAIN FIND STRATEGIES
Oracle is attracting a bullish combination trade for the second time in less than a week.

A trader bought 5,250 August 34 calls for $0.04 less than 3 minutes before yesterday's close and, at the same second, sold 5,250 August 25 puts for $0.04, according to optionMONSTER's tracking systems. Volume was well above the previous open interest in each strike, showing that this is new positioning.

The trade was similar to one opened last Thursday, when 5,000 August 31 calls were bought and the same number of August 29 puts were sold.

The strategy behind both trades is highly bullish, as a rally by mid-August would increase the value of the long calls while rendering the puts worthless. However, the opposite would occur if the stock drops. (See our Education section)

ORCL was down a penny yesterday to $30.10. The database company, which gapped lower after its last two earnings reports in March and last month, is now trading at its lowest levels since November. But the stock has also held support above $29 since last July, so traders may think that chances are good for a bounce.
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As discussed last week, when using the Stock Replacement Strategy to replace a stock position to trade direction, we want to use an option that has very similar characteristics to the stock. We talked about using the deep in-the-money, 80 to 85 delta option that is similar in the Greeks and has relatively little extrinsic value which tends to work against us in stock directional trading.

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