Catalyzes the selective oxidation of C1 hydroxyl moieties on chitooligosaccharides with concomitant reduction of molecular oxygen to hydrogen peroxide. This results in the formation of the corresponding lactones, which typically undergo spontaneous hydrolysis. Chitooligosaccharides are homo- or heterooligomers of N-acetylglucosamine (GlcNAc) and D-glucosamine which are linked through beta-1,4-glycosidic bonds. For optimal substrate binding at least 2 GlcNAc units are needed, and chitooligosaccharide oxidase is most efficient on chitobiose, chitotriose and chitotetraose. N,N'-diacetylchitobiose + O2 = H2O2 + N,N'-diacetylchitobiono-1,5-lactone N,N',N''-triacetylchitotriose + O2 = H2O2 + N,N',N''-triacetylchitotriono-1,5-lactone N,N',N'',N'''-tetraacetylchitotetraose + O2 = H2O2 + N,N',N'',N'''-tetraacetylchitotetraono-1,5-lactone Binds 1 FAD per subunit in a bicovalent manner. The FAD cofactor is bound via a bicovalent 6-S-cysteinyl, 8alpha-N1-histidyl FAD linkage. Belongs to the oxygen-dependent FAD-linked oxidoreductase family.