Technology stocks have been hit fairly hard recently, with Intel (NASDAQ:INTC) taking a particular pounding on its inability to find a plan in what is not a very mobile world, while Hewlett Packard (NYSE:HPQ) spins around  in a funk of its own for myriad reasons.

However, breaking the trend was software giant Oracle (NASDAQ:ORCL) reported earnings results for the quarter ending November 30,  2012, after the market closed on Tuesday.

Oracle said it made a profit of 64 cents per share, outpacing analysts’ estimates of a profit of 61 cents per share. Software sales were strong; Oracle said sales in the period rose 17%, beating its forecasted range of 5% to 15%. Guidance for the current quarter was in line with expectations. Shares of Oracle were up more than 3% on the news in early trading on Wednesday, and have settled into near 52-week high levels over the last several days.

Analysis:

The technology sector looks to be in fine shape with the news from Oracle. In fact, it could be said that Oracle’s health bodes well for the entire economy. Oracle sells products to businesses that are clearly spending beyond what it had forecast. Despite the good news, caution is warranted based on valuation. Analysts expect the company to grow profits by 10% from the current fiscal year ending May 31, 2013, to the next.

At current prices, shares trade for 13 times current fiscal year estimated earnings. There was no indication in the results that current estimates are too low; thus the gains in Oracle shares after the news may be of the celebratory sort. Investors tend to bid up shares on positive operating results. I would use the gains as an opportunity to take some money off the table here.

Action:

Consider buying Put options on Oracle after the impressive gains for a one-month trade. Shares are likely to drift lower after the euphoria of the earnings news fades.