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Introduction

Today I will explore a potential trade strategy for $Oracle(ORCL)$ Oracle Corporation (ORCL) before its earnings announcement (after-market). Given the current available information, there are a number of factors to consider when assessing whether to purchase PUT options at a later stage. Let’s explore these with more details to provide a more informed view on potential trade opportunities for ORCL.

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Overview of Oracle Corporation

Oracle Corporation is a multinational computer technology company based in Redwood City, California. The company specializes in developing and marketing database software and technology, cloud engineered systems, and enterprise software products. Oracle has been a leader in the technology industry since its establishment in 1977, and it has continued to innovate and expand its offerings over the years.

Oracle's Potential with AI

As the technology industry continues to evolve, AI is becoming an integral part of software development. Oracle has recognized the potential of AI and has been investing in this technology to enhance its products. For instance, Oracle's Autonomous Database is designed to use AI and machine learning to automate tasks such as database tuning and security patching. Oracle has also developed the Oracle Cloud Infrastructure (OCI) that is powered by AI to offer a secure, scalable, and cost-effective cloud solution.

Overview of Oracle's products

Oracle's Products and Competitors

Oracle's product offerings are vast and include databases, middleware, applications, and hardware systems. Some of the company's popular products include Oracle Database, Oracle Fusion Middleware, Oracle E-Business Suite, and Oracle Cloud Infrastructure.

In terms of competition, Oracle faces stiff competition from companies such as Microsoft, Amazon, and Google. These companies have also been investing in AI and cloud computing technology, making the competition even more intense.

Oracle's Past Earnings Reports

Oracle's past earnings reports have been positive, with the company exceeding analysts' expectations in most cases. In September 2022, Oracle announced its fiscal 2023 first-quarter financial results, reporting a revenue of $10.9 billion, up 3% year over year. The company's net income was $3.7 billion, up 6% year over year.

In December 2022, Oracle announced its fiscal 2022 third-quarter financial results, reporting a revenue of $11.4 billion, up 2% year over year. The company's net income was $3.7 billion, up 15% year over year. Oracle's cloud services and license support revenues were $7.7 billion, up 3% year over year.

Oracle's Potential Trade Strategy

Based on the information available, it appears that Oracle has been performing well in the current market conditions. While the broader market has been dropping due to reports of persistent inflation and expectation of higher terminal interest rates, Oracle has maintained its high stock price, staying up 8.3% year to date compared to the $S&P 500(.SPX)$ S&P500’s gains being reduced to 4.3%.

Given the current market conditions, it is not easy to predict how Oracle's earnings announcement will affect its stock price. However, based on the day chart (below), there seems to be resistance level around 91, indicating that Oracle may struggle to maintain its high price even if the earnings results are very good.

ORCL resistance level

Therefore, a potential trade strategy for Oracle would be to purchase PUT options $ORCL%2020230317%2092.0%20PUT$ $ORCL 20230317 92.0 PUT$  at the strike price of 92 expiring next week. This strategy is based on the assumption that Oracle's stock price may drop due to the resistance level and the broader market conditions. Additionally, purchasing PUT options will allow me to profit from the stock's potential decline without having to purchase the actual stock.

Conclusion

In conclusion, trading Oracle Corporation (ORCL) before its earnings announcement can be a tricky endeavor, especially with so many variables at play. While ORCL has consistently beaten earnings estimates, its stock price has already seen significant growth, and it may not be poised for much more in the short term.