Oracle Corp. (NYSE:ORCL) is heading into its fiscal first-quarter earnings report with options markets pricing a potentially sharp move, while traders appear increasingly willing to pay for upside exposure.
Oracle Options Price In 11% Earnings Move
Oracle is scheduled to report results Thursday after the market close. Options are currently pricing an approximately 11% move, or about $18, around earnings, according to Julia Spina, head of research at IG Group North America.
While speaking on CNBC’s "Power Lunch," Spina said the implied move is large but not unusual for Oracle given its recent earnings history.
"The options are pricing about an 11% move," Spina said, noting that Oracle’s reactions over the past three earnings cycles ranged from roughly 8.5% to 10.8%.
She also highlighted Oracle’s history of outsized reactions, including a roughly 35% jump after last year’s earnings.
Traders Favor Oracle Calls Over Puts
Spina said calls are trading richer than puts, meaning traders are paying relatively more for upside exposure than downside protection.
"[That’s] kind of the opposite of what you normally see in equities markets," Spina said, explaining that investors typically pay more for puts as protection against declines.
The bullish options activity has accelerated over the past two weeks as Oracle shares gained momentum, potentially reflecting investors’ fear of missing another major rally.
CPI Adds Another Volatility Catalyst
The Consumer Price Index report is also due the day after Oracle’s earnings, adding another potential source of market volatility.
"These are kind of factored into that 11% move," Spina said, referring to both earnings and the upcoming inflation data.
Oracle Earnings: Revenue, EPS Estimates Near Record Levels
Analysts expect Oracle to post first-quarter revenue of $19.14 billion, up from $14.93 billion a year earlier. The company has surpassed Wall Street’s revenue estimates in each of the past two quarters and in four of the last 10 quarters.
The revenue forecast is just below Oracle’s record quarterly revenue of $19.18 billion, reported in the fourth quarter.
Wall Street also expects first-quarter earnings per share of $1.74, compared with $1.47 in the year-ago quarter. Oracle has topped EPS expectations for three consecutive quarters and in seven of the past 10 quarters.
Price Action: Oracle shares closed at $161.63, down 0.89% on Wednesday, while Thursday’s premarket trading showed the stock at $161.00, down 0.39%, according to Benzinga Pro.
Benzinga Edge Stock Rankings place Oracle in the 92nd percentile for Growth, while its price trends point to short-term weakness and a downside price trend over the medium and long term.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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