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Oracle Pullback Draws the Bulls

By David Russell, reporter at OptionMonster

NEW YORK -- Software giant Oracle (ORCL) has pulled back, and the bulls are stepping in.

OptionMonster's tracking systems detected the purchase of about 10,400 April 34 calls against open interest of 1,035 contracts on Friday. Most of them priced for $1.42 to $1.44, but premiums rose to as much as $1.65 when the stock inched higher.

Calls lock in the price where investors can buy shares. They can provide huge leverage relative to the share price but can also lose most or all of their value from even a small decline.

Oracle shares were little changed when the trades began but then started climbing and ended the session up 1.37% to $34.75. The stock gapped higher after a strong earnings report in December and hit a 19-month higher in January. It's been retreating since then and is now attempting to bounce at its 50-day moving average.

Total option volume was slightly above average in the name, but calls outnumbered puts by a bullish ratio of almost 4 to 1.

Russell has no positions in ORCL
This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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