Oracle Corp. (ORCL), Trending Stock Report

Oracle Corp. (ORCL) is the trending headline in news outlets and it’s the predominant topic in social media mentions that are up, 520% in the last 24 hours. The reason ORCL is the hot topic is that the company announced earnings that beat estimates crediting tremendous growth in demand for their AI training cloud tools.

What does this mean for an options trader? As of this writing, the CPI inflation data has not been announced. But in the past, investors tend to focus on the earnings for tech stocks that are announcing and not the CPI data so much. We do expect ORCL implied volatility to get crushed. In the past, after earnings, ORCL implied volatility fell anywhere from 4% to 24%. We can use a high-probability strategy that takes advantage of falling volatility expectations on ORCL this morning.

This MDM graph compares the modeled expectations of current options prices (the orange line) to the actual movement of ORCL’s stock price over the past year. You can see that the actual behavior (the blue histogram) doesn’t look anything like the modeled expectation. But remember this data is from yesterday’s close. The modeled expectations are going to change substantially today now that the earnings report is public. If we can get filled at a high price this morning, the expected volatility crush will work in our favor.

This Volatility Term Structure chart is showing us that volatility expectations and options prices are the highest for the June 14^th expiration. To learn more about Volatility Term Structure, click here. Because we are interested in selling options we will use this expiration for our high-probability strategy. This expiration will also have the greatest drop in volatility expectations now that the earnings report is out.

ORCL announced earnings and the stock is up over $10 or 8.2% as of this writing. We can use a high-probability strategy to take advantage of the expected volatility crush if we can get the right price in the action this morning.

Be sure to read the ODDS Online Daily Trade Idea report to get the details of our trade idea for ORCL today.