Market Overview

Goldman Sachs Suggests Buying Strangles on Oracle

Goldman Sachs is out with a research note this morning, where it suggests that traders buy strangles on Oracle (NASDAQ: ORCL) ahead of earnings.

Goldman's analysts noted that controversy on ORCL's fundamentals is elevated following last quarter's 12% share price decline on weaker license and hardware trends.

Goldman Sachs Software analyst Heather Bellini notes early signs that license revenue growth should surprise to the upside, however, she sees continued risks to consensus expectations for the hardware business (around 20% of sales, including maintenance).

Despite increased uncertainty, options are implying +/-6% move on earnings, slightly above the 8Q median move of +/-4%.

The analysts suggest buying the April $28/31 strangle for $1.11

Oracle Corporation, incorporated in 2005, is an enterprise software company. The company develops, manufactures, markets, distributes and services database and middleware software, applications software and hardware systems, consisting primarily of computer server and storage products.

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