This is what headlines (in relation to Oracle's earnings) look like: "Oracle Corp. (NasdaqGS: ORCL - News) has reported fiscal first quarter 2011 earnings results after the bell Thursday, and the much-anticipated report did not disappoint Oracle investors. Citing strength in new software licensing, Oracle reported a 50% jump in revenues (non-GAAP) to $7.6 billion in the quarter. This amounts to an EPS of 42 cents per share, easily beating the Zacks Consensus Estimate of 35 cents.".
So what the trade? From the long-side, I'd actually use the opportunity (in the potential jump in the tech sector on back of the Oracle news) to look at Apple. Why Apple? Because its the best Technology Company out there and more importantly, the option pricing provides an attractive opportunity to make some $$$$. I like the Jan 2011 300 strike call options. They are trading at around $10.50 at the bid and the stock is at a technical crossroads. It's extremely close to its 52-week high $279.01 and I believe that if we were to take that down, this would ignite a further rally in the stock both from long-only investors and short covering. Most of Wall-Street have Apple's 1-year price target pegged at $320-360/share and I believe that we can see $300 share easily going into Q3 earnings. That could mean a handsome return for Jan 2011 Calls which don't expire for a few months after that.
Below is the trade:
Buy: Jan 2011 Call Option
Strike: 300
Price: ~ $10.50
Strategy: Buy if we break our 52-week high and hold until next Q earnings.
No comments:
Post a Comment