Oracle (NASDAQ: ORCL) shares are trading higher today after competitor IBM (NYSE: IBM) posted a strong second-quarter profit that beat analysts' estimates. IBM said its sales were strongest in its information technology services division, which could be a good sign for ORCL. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ORCL.

After hitting a one-year low of $18.18 in February, the stock hit a one-year high of $23.57 in June. ORCL opened this morning at $20.89. So far today the stock has hit a low of $20.65 and a high of $21.20. As of 1:15, ORCL is trading at $21.14, up 37 cents(1.8%). The chart for ORCL looks bearish and steady, while S&P gives the stock its highest 5 Stars (out of 5) strong buy rating.

For a bullish hedged play on this stock, I would consider a September bull-put credit spread below the $18 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 7.1% return in just two months as long as ORCL is above $18 at September expiration. Oracle would have to fall by more than 15% before we would start to lose money. Learn more about this type of trade here.

ORCL hasn't been below $18 at all in the past year and has shown support around $20 recently. This trade could be risky if the company's earnings (due out in mid September) come out before expiration and disappoint, but even if that happens, this position could be protected by the support the stock might find at its year low, which is just above $18.

Brent Archer is an options analyst and writer at Investors Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent owns and controls positions in ORCL and IBM.

U.S. stock futures turned higher Friday morning after earnings from Citigroup that beat expectations offset disappointment from Merrill, Google and Microsoft. There was also some pressure from oil as prices rebounded to above $131 a barrel, following Nigeria cutting output.

Many on Thursday started wondering if we have seen the bottom. Stocks rallied for a second straight session as oil continued its price drop. Better -than-expected earnings for JPMorgan Chase (NYSE: JPM) again lifted banks. The Dow Jones Industrial Average gained 207.38 points, or 1.9%, the S&P 500 index rose 15.7 points, or 1.2%, and the Nasdaq Composite Index gained 27.45 points, or 1.2%.

Without any economic releases today, the market will continue to focus on earnings, and investors have a lot to mull, especially after Thursday's wave of financial results releases after the close, and with financials and techs being in the center of attention.

After JPMorgan Chase brought on some optimism with its results Thursday morning, Merrill Lynch (NYSE: MER) reported after the close a wider-than-expected loss of $4.65 billion, or $4.9 a share, on $9.7 billion of credit-market writedowns. The loss per share was larger than any analyst had expected according to Bloomberg survey. MER shares are declining over 4.8% in premarket trading.

The Wall Street Journal reports a mixed picture on technology earnings. Google Inc. (NASDAQ: GOOG) and Microsoft Corporation (NASDAQ: MSFT) disappointed investors but International Business Machines (NYSE: IBM) put impressive numbers on the board.

Here are the details:

• Google. The Journal reports that Google's net was up 35%, but investors expected it to make $4.74 excluding stock options -- 11 cents more than the $4.63 it reported -- Google lost 10% of ita market value after-hours.
• Microsoft. The Journal reported that Microsoft's net was up 42%, it reported EPS of 46 cents a share. But investors did not like its guidance. Microsoft's guidance of $2.12 to $2.18 per share on revenue from $67.3 billion to $68.1 billion was less than the $2.16 on revenue of $67.3 billion that analysts expected. Microsoft lost 5.7% of ots market value after-hours.
• IBM. The Journal reports that IBM's net was up 22% to $1.98. Investors had expected it to make $1.82 -- its stock was up slightly in after-hours trading.

Classic blue-chip tech company IBM (NYSE: IBM), whose colleagues include Dell (NASDAQ: DELL), Microsoft (NASDAQ: MSFT) and Hewlett-Packard (NYSE: HPQ), is due to report earnings on Thursday after the market closes up shop. What are investors looking for? Growth, of course. Should they expect it?

Well, according to Trey Thoelcke's earnings data, Wall Street is looking for IBM to deliver earnings per share around the $1.82 mark for the second quarter. Revenues should be near $25.9 billion. If Big Blue hits both of these numbers, it would show that the company is coming along fine and that the current level of the stock price is justified. Of course, Wall Street doesn't want IBM to merely hit those numbers. Oh no, that would be too easy. Wall Street wants IBM to beat those expectations. In terms of the bottom line, there is positive recent history for an earnings beat. The company handily beat estimates in the last two quarters, and met expectations in the two quarters previous to that time frame.

Will the company beat expectations? I think it will. The momentum seems to be favorable for such an outcome. In fact, in a relative sense, the stock isn't signaling a terrible report by any stretch of the imagination. The 52-week low is $97.04 and the 52-week high is $129.99. IBM closed up on Wednesday over 2% to a share price of $125.94. Doesn't sound like the market is worried, does it?

Reuters reports that today is a big one for bank and technology earnings. It looks like Merrill Lynch (NYSE: MER) will lose big and will try to soften the blow with an announcement about selling its 20% of Bloomberg LP for $4.5 billion to its founder, New York mayor, Michael Bloomberg. JP Morgan Chase (NYSE: JPM) and a handful of big technology companies are expected to report profits. But will they be enough?

Meanwhile, how can we make sense of yesterday's 276 point rally on Wall Street? Nobody knows what happened, but theories abound: the price of oil fell -- possibly due to anticipation that the Fed would raise interest rates to deal with inflation that is roaring out of control. Higher interest rates would strengthen the dollar, which would drive down the price of oil since it's traded in dollars. But I think yesterday's market was a short-covering frenzy. With the SEC foolishly squeezing the shorts, they needed to cover their bets that financials would fall further. Of course good news from Wells Fargo (NYSE: WFC) didn't hurt.

Today's earnings -- with estimates courtesy of a Reuters analyst survey -- are likely to move the market. Here's a roundup:

• Merrill Lynch is expected to lose $1.94
• JPMorgan was expected to make $0.44, down 63% from 2007. At a Price/Earnings to Growth (PEG) ratio of 0.4 and a P/E of 12 on earnings forecast to grow 31% to $3.34 in 2009, it looks cheap. CNNMoney reports it made 54 cents -- well ahead of expectations and its shares are up 5% in premarket.
• Microsoft Corp. (NASDAQ: MSFT) will earn 47 cents a share, a 21% increase from last year. At a PEG ratio of 1.1 and a P/E of 15 on earnings forecast to grow 14.3% to $2.16 in 2009, it looks reasonably priced.

U.S. stock futures edged higher Thursday morning, a day after market staged a big rally. Investors this morning are bracing for some housing data, but more importantly, a wave of earnings. Already better-than-expected earnings from J.P. Morgan Chase boosted stock index futures from earlier declines this morning.

On Wednesday, bulls finally came back in drove to but equity as oil price continued its decline and airlines and Wells Fargo (NYSE: WFC) reported results that Wall Street found encouraging, sending airline and financials stocks through the roof. The Dow Jones Industrial Average ended a three-day losing streak, jumping 276.74 points, or 2.5%. The S&P 500 climbed 30.45 points, or 2.5%, and the Nasdaq Composite gained 69.14 points, or 3.1%.

Still, all this sentiment might yet evaporate, or be seriously damped after housing data is released at 8:30 a.m. EDT. Building permits and housing starts for June are due out at that time. Also, weekly jobless claims will continue to paint the picture of the goings on in the labor market. At 10:00 a.m., the Philadelphia Fed index for July will be reported.

It would be interesting to see how the data and earnings play out. Already, J.P. Morgan Chase (NYSE: JPM) reported it profit sank 53% in the second quarter to $2.00 billion, or 54 cents per share. That beat estimates of 44 cents share. JPM shares are up over 5.5% in premarket trading.

So the Wall Street Journal and a few blogs reported that Apple Inc. (NASDAQ: AAPL) said Tuesday it has filed a suit against Psystar Corp., a Florida-based company that makes and sells computers that run Leopard, Apple's Macintosh operating system software. The suit was filed July 3.

Apple seems to think that Psystar is infringing its copyrighted computers as Psystar's $600 Open Computer "violates an Apple policy that forbids people from installing Apple's Macintosh software on anything other than an Apple-labeled device."

But according to AppleInsider, "A representative for the company, identified only as Robert [argues] that the Mac OS X end-user license agreement, which prohibits third-party installations of Mac OS X on non-Apple hardware, stands in violation of antitrust laws." Rodolfo Pedraza, Psystar co-founder said in the past to the Journal that his company pays for every copy of the software it sells.

I understand what Apple is so worried about. If anyone remembers the IBM Clones of the 80s, they also remember that very quickly IBM has lost the leadership role in the market for IBM PC compatibles by 1990. It wasn't the end for International Business Machines Corp. (NYSE: IBM) as it derived a considerable income stream from license fees. But Macs are not just hardware, they're software too, and we all know what operating system has dominated those PCs. Microsoft Corporation (NASDAQ: MSFT) Windows has become the global leader.

So other than the fact that Apple has different rules on what can run on its computers, iPods and iPhones, including the strict iTunes/iPod relationship, seem strenuous to the extreme and definitely borderline violating some consumer protection laws, it's also possible Apple may be missing on a great opportunity here. The Journal mentions that No. 2 computer maker Dell Inc. (NASDAQ: DELL) is interested in making such Apple OS capable computers, meaning Apple see sales increase ten fold and capitalize on licensing fees as well as software sales.

Then again, knowing Jobs' strict attention to details, his Alpha personality and controlling nature, I'd say that's likely never to happen.

Microsoft (NASDAQ: MSFT), a competitor of IBM (NYSE: IBM) and Google (NASDAQ: GOOG), will report its earnings for the fourth quarter on Thursday. According to Trey Thoelcke's earnings summary, the software giant will be expected to produce sales of about $15 billion on earnings per share of 47 cents. These numbers would represent double-digit growth rates for each metric.

According to this estimates page at AOL Finance, Microsoft has cultivated a reputation for being reliable when it comes to delivering on Wall Street expectations. It certainly has the assets to keep this trend going. The company's operating-system monopoly, as well as its incredible success with the Office suite of products, guarantees a steady stream of cash flow and bottom-line predictability. Other investments, such as the Xbox 360 and the company's various Internet properties, aren't as guaranteed. In fact, Microsoft has engaged a very strange battle (strange to me and others, at least) to buy Yahoo! (NASDAQ: YHOO) to bolster its future prospects on the 'net.

So, here's what investors should be looking for. I will be very interested in what management has to say about its thoughts regarding Yahoo! and its utility for Microsoft. Is it an absolute necessity? I doubt it, and I really do hope that shareholders will finally get some closure on this subject. The best thing would be for Microsoft to announce that it is done with the portal. And in terms of the Xbox 360, I would be interested in hearing any new marketing strategies being readied for the holiday season and if the current recessionary environment will have any effect on sales. Microsoft recently reduced the price for one Xbox 360 model as a way of increasing that system's value proposition in relation to the Sony (NYSE: SNE) PlayStation 3 and the Nintendo (OTC: NTDOY) Wii. The company also has entered partnerships with General Electric's (NYSE: GE) NBC Universal and Netflix (NASDAQ: NFLX), according to Variety, to make its Xbox Live asset even more attractive to users looking for cool content such as movies and TV shows.

As the second quarter earnings crunch begins in earnest this week, the bear market has investors jittery and prognosticators spinning out dire warnings. In the wake of mixed results from Alcoa (NYSE: AA) and General Electric (NYSE: GE) kicking things off last week, here's a look at what Wall Street is expecting from many of the companies scheduled to report this coming week.

Analysts surveyed by Thomson Financial are expecting the following companies to report a rise in earnings when compared to the same period of the previous year.

• Nucor Corp. (NYSE: NUE): $1.80 EPS (36.6%) on sales of $6.4 billion (+53.0%)
• Google Inc. (NASDAQ: GOOG): $4.74 EPS (24.9%) on sales of $3.9 billion (+41.6%)
• Nokia Corp. (NYSE: NOK): 56 cents EPS (23.2%) on sales of $19.9 billion (+17.8%)
• CSX Corp. (NYSE: CSX): 90 cents EPS (21.1%) on sales of $2.9 billion (+12.8%)
• Altera Corp. (NASDAQ: ALTR): 27 cents EPS (18.5%) on sales of $346.7 million (+8.4%)
• IBM (NYSE: IBM): $1.82 EPS (+17.6%) on sales of $25.9 billion (+9.0%)
• eBay Inc. (NASDAQ: EBAY): 41 cents EPS (17.1%) on sales of $2.2 billion (+18.0%)
• W.W. Grainger Inc. (NYSE: GWW): $1.46 EPS (17.1%) on sales of $1.7 billion (+8.0%)
• Microsoft Corp. (NASDAQ: MSFT): 47 cents EPS (17.0%) on sales of $15.7 billion (+17.0%)
• Honeywell International Inc. (NYSE: HON): 94 cents EPS (17.0%) on sales of $9.2 billion (+7.9%)

Yup, that pretty much sums up Oracle Corp. (NASDAQ: ORCL)'s recently delivered quarterly results. Strong. So strong, one could forget there is a slowdown in economic activity. So strong, no one remembers now Oracle's previous quarter scare (that the weak economy indeed would affect it and tech stocks). So strong, it has surpassed International Business Machines (NYSE: IBM) to become the second-largest software company in sales. It is no wonder then that the stock climbed 1.86% in after-hours trading to $22.97. It closed at $22.55.

By the numbers, Oracle's profit jumped 27% to $2.04 billion, or 39 cents a share, but excluding acquisition costs and some other expenses, profit rose to 47 cents a share. Revenue rose 24% to $7.28 billion. Oracle beat analysts' estimates on both counts. And this is just the tip of the iceberg; the results showed strength and improvement in many areas:

• New software sales in the U.S. grew 22% and overall sales in the Americas, where the U.S. dominates, grew 18% after declining last quarter. Doesn't look like companies are cutting too much spending on software, does it? Keep in mind, growth in the region was indeed slower.
  
• The segment that competes with SAP jumped 36% - a good example of Oracle's ability to bounce back.
• Sales of new software licenses climbed 27% - it's amazing how Oracle managed to turn the trend on this number that concerned investors so much in the previous quarter. If that's not a good sign for future sales, what is? And if that doesn't give confidence in management and strategy, what does?
• Operating margin for the quarter was 48% - better than Microsoft (NASDAQ: MSFT)'s, and that says it all.
  

The company, known for its acquisition strategy, closed its $8.5 billion purchase of BEA Systems Inc. in April. The acquisitions didn't just allow Oracle to grow to its second place, but gave it a diversity of products that helps it with sales and crossover sales.

One caveat: This quarter has always been known to be Oracle's best one. Still, the numbers don't lie, and this is one company that has been more than consistent.

Here is the Oracle's Earnings Transcript.

Deutsche Bank upgraded department store J.C. Penney (NYSE:JCP) to "buy" from "hold" according to MarketWatch.

Piper Jaffray downgraded Motorola (NYSE:MOT) to "sell" from "neutral", according to Briefing.com. The news service also reports that Lehman raised its price target on First Solar (NASDAQ:FSLR) to $335 from $280.

IBM (NYSE: IBM) was raised to "outperform" at BMO Capital Markets, according to 24/7 Wall St.

Douglas A. McIntyre is an editor at 247wallst.com.

Minyanville's Sean Udall dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

Earlier in the week, I noted that Goldman Sachs (NYSE: GS) was well positioned to capitalize on what's happening in the financial services space. And nowhere is that becoming more clear than in the advice it's offering and capital raises it's conducting for troubled institutions like Fifth Third Bankcorp (NASDAQ: FITB), Wachovia (NYSE: WB) and Washington Mutual (NYSE: WM).

Like looking to IBM (NYSE: IBM) for your office computer needs in the old days, Goldman is now the obvious choice if you're a bank CEO under siege.

But this may be a short-term benefit for Goldman, as the excessive concentration of business in one firm ultimately puts that firm's whole franchise at risk. If the Goldman brand is to maintain value with investors, it must become increasingly selective as to who it sponsors. But being choosy puts clients at risk.

Position in GS options

In its mid-year forecast, Dow Theory Forecasts -- which has been published for 5 decades -- features its top current picks, including IBM (NYSE: IBM), which earns its top designation as a "Focus List Buy."

Editor Richard Moroney explains, "IBM has repeatedly forecast its goal of per-share earnings of $10 to $11 in 2010. The company is well on its way to achieving that goal. Software, in particular, is key to IBM's earnings target.

"The company completed its acquisition of Telelogic in April, three months after purchasing Cognos. IBM expects acquisitions to contribute 3% of its goal of 7% to 10% growth in software sales.

"From 2002 to 2007, mainframe sales averaged 6% growth, but sales fell in three of those years, including 2007. The March quarter showed no improvement, as sales in the division fell 7%. But, with energy prices up, IBM sees an opportunity with its new, energy-efficient Z-series mainframe.

"Server sales have been spotty, but IBM's sales force translates server revenue into two to three times as much in software and systems revenue. IBM, with the potential to reach $155 to $165 over the next 12 months, is a Focus List Buy and a Long-Term Buy."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

Before the bell: Futures edge lower ahead of CPI

Anheuser-Busch Cos. (NYSE: BUD) is holding preliminary talks with rival Grupo Modelo SAB (Corona maker), according to The Wall Street Journal, in an attempt to thwart the $46 billion unsolicited offer it received Belgian brewer InBev SA.

Exxon Mobil (NYSE: XOM) said it plans to exit its U.S. retail gasoline business over the next few years, shedding the 820 service stations it still owns and operates and another 1,400 company-owned outlets operated by dealers of its branded fuels. Separately it also said it could spend more than $100 million for offshore oil exploration in the Philippines.

In the United States when one company wants to inflict pain on a competitor it commonly uses the law as its weapon of choice, enlisting an army of lawyers to bludgeon the rival with legal actions. Right or wrong one company can tie the other up in court for years, and if the competitor is smaller and weaker, put it out of business or inflict great hardship.

In Russia, they seem to be skipping the middle man -- not engaging the lawyers, but going straight to the government. According to the most recent issue of Business Week, companies are paying public officials to raid the offices of business rivals and subject them to criminal investigations.

Some 8,000 companies a year are targets of lawsuits or investigations at the behest of rivals seeking to put them out of business or take them over, the Russian Chamber of Commerce & Industry says. Russians call this process reiderstvo, or raiding.

In most cases, the raids are conducted by something similar to our SWAT teams, removing documents and computers and soon after bringing charges of tax evasion, fraud and conspiracy. It is reported that the police, civil servants and court system all play along for a price.