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Oracle attracts bullish trade at lows

Mike Yamamoto (mike.yamamoto@optionmonster.com)

Oracle has been slammed since revenues missed estimates last week, but one trader is positioning for a rebound in the next two months.

optionMONSTER's tracking systems detected the purchase of 5,000 August 31 calls for $0.55 and, at the same second, the sale of 5,000 August 29 puts for $0.60. Volume was above the previous open interest in the calls, indicating that this is a new combination trade.

The position is bullish because the long calls will appreciate if ORCL rallies while the puts sold short will lose value. But the opposite will occur if the stock falls, and the trader will face the obligation to buy shares below the $29 level. (See our Education section)

ORCL rose 0.6 percent yesterday to close at $30.14. The database company, which gapped down after its last two quarterly reports in March and a week ago, is now trading at its lowest levels since last November. But the stock has also held support above $29 since last July, so traders may believe that there is a good chance that it will bounce from current levels.

Overall calls in the name outnumbered puts by more than 2 to 1 yesterday.

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