By Jud Pyle, CFA, chief investment strategist for the Options News Network


) --


(ORCL) - Get Report

$7.4 billion acquisition of

Sun Microsystems

( JAVA) could be delayed due to antitrust issues, according to reports early Wednesday, and investors are taking the opportunity to bet on a potential slide in the shares by buying puts.

Nearly 20,000 Dec. 20 puts have changed hands so far today vs. open interest of just 5,000 contracts, indicating investors traded these options to open. The implied volatility of these puts is currently 36, compared with a 63-day realized volatility of 28. Assuming that investors hold these shares until December expiration, this put purchase will make money if Oracle shares expire lower than $19. But keep in mind that investors could sell these puts if the stock drops significantly throughout the next few months and take profits instead of holding onto them.

Put-buying such as this does not mean investors should clean out their supplies of Oracle. But it is noteworthy that at least one investor expressed bearishness or bought puts to hedge a long position in the stock, most likely looking for further downside on negative news out of the company. Given that the shares are up more than 50% since their March lows, that rally could be the reason.

-- written by Jud Pyle in Chicago. Pyle is the chief investment strategist for Options News Network ( and the portfolio manager of Options Alerts. Click here for a free trial for Options Alerts. Mr. Pyle writes regularly about options investing for

Jud Pyle, CFA, is the chief investment strategist for Options News Network. Pyle started his career in finance in 1994 as a derivative analyst with SBC Warburg. After four years with Warburg, Pyle joined PEAK6 Investments, L.P., in 1998 as an equity options trader and as chief risk officer. A native of Minneapolis, Pyle received his bachelor's degree in economics and history from Colgate University in 1994. As a trader, Pyle traded on average over 5,000 contracts per day, and over 1.2 million contracts per year. He also built the stock group for all PEAK6 Investments, L.P. hedging, which currently trades on average over 5 million shares per day, and over 1 billion shares per year. Further, from 2004-06, he managed the trading and risk management for PEAK6 Investments L.P.'s lead market-maker operation on the former PCX exchange, which traded more than 10,000 contracts per day. Pyle is the "Mad About Options" resident expert. He is also a regular contributor to "Options Physics."