Cloud-networking software solutions continue to be big business, and Oracle (ORCL) is one of the leaders in the industry. With tech in a strong uptrend, I wanted to get into ORCL to play a possible push past $40.

Monday’s high reached $37.49. Resistance is at $37.50-$38. Support is at $37 and the 100-day moving average, followed by $36.50.

Buy to open the ORCL April 40 calls (ORCL160415C00040000) at current levels.

My exit target for the calls is $0.80. I do not have a stop loss at this time.

These options were heavily traded this week, which is a possible clue that bullish traders are setting up for an earnings beat when the company reports in mid-March.   Wall Street is expecting Oracle to earn $0.62 a share on revenue north of $9.1 billion. There is a nickel of wiggle room, as the high estimate is at $0.65, while the low number is pegged at $0.60 a share. Revenue estimates run past $9.3 billion, with a low estimate near $9 billion.

The company has topped or matched expectations during three of the past four quarters by $0.03 and $0.01. An earnings miss of $0.08 a share was also posted over the past year.

However, this isn’t an earnings trade. My bullish stance on ORCL was based more on the technical outlook, but it is good to do the homework on both so there are no curveballs or surprises.

I could have gone with the March options, but I wanted to give the trade more time to play out. The regular ORCL March options will expire three weeks from this Friday.

I consider options to be in the “danger zone” when they are less than three weeks from expiration, as time premium starts to erode. This is often the time when options can make large percentage moves, so you have to be extra cautious when trading them.

To receive further instructions on this trade, please sign-up for a risk-free, 60-day trial of Momentum Options and take advantage of 50% off the introductory rate for the next three days only.  You’ll also receive my brand new March Stock Watch List, and 6 other key option trading reports.