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

At least one investor is calling limited downside in


(ORCL) - Get Free Report

and expressing that bet by selling puts months ahead of the company's earnings announcement.

Looking at the Dec. 20 puts in ORCL, an investor sold these options 5,000 times, contributing to the 28,200 contracts that have crossed the tape so far today.'s Sidewinder report showed the investor sold these puts for around 35 cents each. If the investor decides to stay short these Dec. 20 puts until expiration on Dec. 18, this sale will turn a profit if ORCL shares expire higher than $19.65.

The Dec. 20 puts are home to current open interest of 38,700 contracts, which could indicate the investor sold these options to close.

Shares of ORCL are currently trading up 50 cents to $22.31. These puts have a delta of 18, so given the move in the stock, they should have declined about 10 cents. But because of the large amount of selling, the puts have declined 15 cents on the day as implied volatility in this strike has slid to 29.5.

ORCL shares have rallied more than 60% since their March lows of around $13.85. It looks like the investor is betting the stock will hold higher than $19.65, which is the breakeven on this trade. This represents a drop of 11% from current levels.

The market expects ORCL to announce earnings figures on Dec. 17 after the market closes, and it is interesting that at least one investor sees limited downside and believes the stock could hold around its current levels until the time of the company's quarterly report.

Put-selling like this is a sign of moderate bullishness, and could be an example of how risk aversion is abating in the market. The investor is willing to cap his gain at 35 cents if the stock remains higher than $20, which explains why this trade banks on limited upside and limited downside.

Jud 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."