Oracle (ORCL) Could Hit New 52-Week High Today

Posted: Tuesday, November 17, 2009 9:13 AM EDT
By: Market Intelligence Center Staff

Oracle (NasdaqNM: ORCL) closed yesterday at $22.83. So far the stock has hit a 52-week low of $13.80 and 52-week high of $22.95. Oracle stock has been showing support around 22.08 and resistance in the 23.26 range. Technical indicators for the stock are Bullish and S&P gives ORCL a neutral 3 STAR (out of 5) hold rating. ORCL appears on the Investors Observer Analysts Favorites list. For a hedged play on this stock, look at a Mar '10 22 covered call (ORQ CV) for a net debit in the $20.92 area. That is also the break even stock price for this trade. This covered call has a 123 day duration, provides 8.37% downside protection and a 5.16% assigned return rate for a 15.32% annualized return rate (comparison purposes only). A lower cost hedged play for this stock would use a longer term call option in place of the covered call stock purchase. To use this strategy look at going long the ORCL Jan '11 10 Call (VOC AB) and selling the Mar '10 22 call (ORQ CV) for a $10.94 debit. The trade has a 123 day life and would provide 8.28% downside protection and a 9.69% assigned return rate for a 29.00% annualized return rate (for comparison purposes only). Oracle has a current annual dividend yield of 0.91%. [ATU-Seven Summits Research]