The shares of software stalwart Oracle (ORCL) may boast a 57.4% year-over-year lead, but the cloud company and artificial intelligence firebrand has taken a 17.7% haircut in price off its Dec. 9 record high of $198.30. Per the chart below, the pullback has in the first few days of 2025 has taken the stock out of a channel of higher highs brought on by a post-earnings bull gap from September. The good news is that this drawdown to end 2024 — and start 2025 — has ORCL testing a historically bullish trendline, if past is precedent.
Buy The Dip
The trendline in question is the shares’ 126-day moving average, which represents half a year’s worth of trading days. Per Schaeffer’s Senior Quantitative Analyst Rocky White, Oracle stock has traded down this trendline three times in the last three years. For the purpose of this study, White defines that as the equity trading above the moving average for 80% of the time over the past two months and closing north of the trendline in eight of the last 10 sessions, before getting within striking distance of the moving average.
Per White’s Data, ORCL averages a 6.2% return one month later, with a 100%-win rate all three times. A move of similar magnitude would put the equity back above $173 and firmly in that bullish uptrend channel that started in September.
Options Activity
Short-term options traders have been incredibly put-biased of late, and an unwinding of these bearish bets could fuel additional tailwinds. This is per ORCL’s Schaeffer’s put/call open interest ratio (SOIR) of 1.01, which stands in the 86th percentile of its annual range.
Regardless of direction, now looks like a perfect time to speculate on Oracle stock’s next move higher with options. The security sports a Schaeffer’s Volatility Index (SVI) of 26%, which stands in the 15th percentile of its annual range, meaning options traders are pricing in relatively low volatility expectations at the moment. Plus, ORCL’s Schaeffer’s Volatility Scorecard (SVS) of 93 out of 100 means it has exceeded options traders’ volatility expectations over the past year, a boon for potential premium buyers.