Monday, April 21, 2008

Why I sold off my Oracle position

For the first time since I began buying individual stocks, I do not own Oracle outright. The call option I sold last month was exercised at expiry and was worth 80¢ since Oracle ended the week at $21.80. Although I lost a little bit on this option, my combined ratio stands at 68.04% for all options written.

The position I sold over the weekend was purchased a little over a year ago for $16.50, which works out to a 29.32% annualized gain. The S&P 500 has lost about 1% over the same time. So that particular trade has been very profitable, as has my Oracle trades in general. I still believe Oracle is misunderstood, but I believe it is trading near its fair value and I don't think its prospects look particularly good in the next few months. Eventually, companies will respond to slowing consumer demand by cutting capital spending. And we have not yet seen the end of bankruptcies even within the financial sector. Perhaps I will be able to buy back into the company if it misses earnings in the next year or two. I hope so, because I'm already starting to miss it.

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