Technology bulls target new highs for old names
02/24/17

High-profile technology stocks are breaking out, and traders continue to pile into the sector.

Analysts cite multiple reasons for the strength: Smartphone upgrades for Apple (NASDAQ: AAPL), cyber-security demand for Cisco Systems (NASDAQ: CSCO) and steady growth in online giants like Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOGL). Altogether they’ve lifted the Technology Select Index by 8.4 percent this year, compared with the S&P 500’s 5.6 percent gain.

Traders turned to Oracle (NASDAQ: ORCL) on Thursday, amassing over 21,000 June 44 calls (options to buy a security). It was one of the busiest contracts on a single-name stock in the session, with almost all of them pricing for $1.11 apiece.

The bet comes after ORCL broke through the same $42 level that’s held it in check for over a year. A further move to its late-2014 high of $46.71 would more than double the value of the calls, while a failure to rally would render them worthless. 

ORCL rose 1.06 percent to $42.96 yesterday. The software giant fell in December after sales of its traditional products continued to shrink, but it’s rallied this year as investors hoped for growth in newer cloud-computing markets. Its next quarterly report is slated for mid-March, well before the calls purchased on Thursday expire. Overall option activity in the company was roughly triple the daily average in the last month, with calls outpacing puts by more than 4-to-1.

Traders also snapped up 3,000 May 18 calls for $0.51 to $0.55 in HP (NYSE: HPQ), the iconic hardware maker that put Silicon Valley on the map last century. Their activity came after a strong earnings report suggested a long-awaited rebound in PC spending is finally taking hold. HPQ surged 8.6 percent to a new 52-week closing high of $17.60.

Bottom line: several catalysts have pushed tech stocks higher, and some investors see opportunities for further gains.