Have you ever watched a stock you believe in get absolutely crushed, only to wonder if that brutal sell-off finally carved out a bottom? That’s exactly where I find myself with Oracle these days. The shares have taken a beating, shedding almost half their value from the peak excitement around artificial intelligence deals. Yet, something feels different now—maybe it’s time to get positioned for a comeback.
Why Oracle Might Have Finally Found Its Floor
Let’s face it: the tech giant became the perfect example of what happens when hype meets reality in the AI space. Investors piled in earlier this year, driving the price sky-high on news of enormous AI-related contracts waiting in the wings. Then, as often happens, profit-taking kicked in hard. The stock plunged from those lofty levels around $345 down to where it sits today, leaving many wondering if the damage would keep coming.
But here’s what catches my eye. Technical indicators are screaming oversold. The relative strength index has dipped to levels that historically signal exhaustion in selling pressure. Add in some fresh developments—like progress on hosting U.S. data for popular social apps—and suddenly the picture looks a bit brighter. In my view, this could mark a turning point for a company that’s quietly building serious infrastructure muscle in the AI race.
The Massive Backlog That’s Hard to Ignore
One number jumped out from the latest earnings report: remaining performance obligations soaring to over half a trillion dollars. That’s not pocket change. It represents locked-in future revenue from cloud and AI commitments, growing at an eye-popping rate year over year. Sure, execution risks remain—delivering on all those promises won’t be easy—but the demand signal is crystal clear.
I’ve followed tech earnings for years, and numbers like this don’t appear out of thin air. They reflect real enterprise spending shifting toward next-generation infrastructure. Oracle isn’t one of the usual suspects in the “Magnificent Seven,” but perhaps that’s part of the appeal right now. The valuation has compressed while the growth story strengthens underneath.
Growth in cloud and AI services continues to accelerate as companies modernize their infrastructure.
Of course, skeptics will point to competition from bigger hyperscalers. Fair enough. But partnerships with leading chip designers and aggressive data center buildouts suggest Oracle is carving its own lane, especially for high-performance workloads.
Leadership and Strategic Connections
It’s hard to talk about Oracle without mentioning its legendary founder, who still holds significant influence as chairman and chief technology officer. His vision has steered the company toward cloud transformation, and his relationships in business and political circles add another layer. Recent deals involving U.S. data security for major apps highlight how those connections can translate into tangible opportunities.
Personally, I think leadership matters more than many give it credit for in long-term investing. When someone with a proven track record stays deeply involved, it often signals confidence in the roadmap ahead.
A Smart Way to Play the Potential Rebound
So, assuming you’re intrigued by the setup but don’t want to go all-in buying shares outright—what’s a reasonable approach? Options can provide leverage without committing unlimited capital. One structure that’s caught my attention lately is the risk reversal, essentially a way to finance upside exposure by accepting some downside obligation.
Think of it as expressing a moderately bullish view while defining your risk upfront. You sell an out-of-the-money put to collect premium, then use part of that credit to buy an out-of-the-money call. The net result: limited debit (or sometimes even a credit), meaningful upside participation, and a clear worst-case scenario.
- Sell a longer-dated put below current levels
- Buy a call further out-of-the-money with the same expiration
- Net cost stays small thanks to the premium received
- Breakeven shifts lower than simply owning stock
In practice, with shares trading near $189, one example involved selling the February 2026 $180 put while buying the matching $200 call. The put brought in solid premium, offsetting most of the call’s cost and leaving just a small net debit. Simple, yet effective for someone comfortable potentially owning shares at that lower strike if things go wrong.
Breaking Down the Risk Reversal Mechanics
Let’s dig a bit deeper, because understanding the payoff profile is crucial before jumping in. At expiration, several outcomes become possible:
- If the stock surges past your call strike, you capture unlimited upside minus the small initial debit—essentially riding the move like a proud shareholder.
- If shares stay range-bound or dip modestly, both options expire worthless, and you keep whatever net credit (or limit the loss to your debit).
- If the stock falls sharply below the put strike, you get assigned shares at that level, effectively buying them at a discount thanks to the premium collected.
That third scenario is key. You’re not facing naked downside; instead, you’ve predefined the price at which you’d happily own the stock long-term. It’s a mindset shift—turning obligation into opportunity.
Compared to simply buying calls outright, this collars your cost. Compared to selling naked puts, you add upside leverage. It’s that sweet spot in between that appeals when conviction is growing but not absolute.
Why Longer-Dated Options Make Sense Here
Choosing expirations more than a year out isn’t random. It gives the thesis time to play out. Cloud migrations and AI infrastructure deals often unfold over quarters, not weeks. Shorter-term options would force quicker resolution and expose you more to volatility swings.
Plus, longer dated contracts tend to have better liquidity in Oracle’s options chain, tighter spreads, and more reasonable premium levels relative to the leverage provided. I’ve found that patience often pays when using options strategically rather than speculatively.
Other Factors Supporting the Bull Case
Beyond the headline backlog, Oracle continues expanding its second-generation cloud platform optimized for intensive AI workloads. Early traction with scalable deployments suggests margins could improve as utilization ramps. That’s the kind of operational leverage investors dream about.
And let’s not overlook the broader environment. Interest rates appear to have peaked, reducing pressure on growth stocks. Enterprise budgets for digital transformation remain robust despite macro noise. In many ways, the setup feels reminiscent of past tech recoveries where patient investors were rewarded.
Is every risk eliminated? Absolutely not. Delivery delays, competitive wins by rivals, or shifts in AI spending priorities could extend the pain. But at current levels, much of that negativity seems baked in. The risk/reward skew looks increasingly attractive.
Position Sizing and Risk Management
No trade idea is complete without stressing discipline. Even with defined risk, overcommitting can turn a smart setup sour. I always advocate allocating only what you can comfortably assign if the put gets exercised. That turns potential assignment into a non-event rather than a crisis.
- Ensure cash or margin availability for the put strike
- Consider the position within overall portfolio context
- Monitor for early adjustment opportunities if the stock moves sharply
- Have an exit plan for both profit-taking and cutting losses
Options aren’t magic—they amplify outcomes, good and bad. Using them thoughtfully around high-conviction ideas is where they shine.
Alternative Approaches for Different Risk Tolerances
Not everyone feels comfortable selling puts. Totally understandable. Conservative investors might prefer straight call purchases or bull call spreads to strictly limit debit while keeping upside. More aggressive types could layer in shares alongside the options for hybrid exposure.
The beauty of options is flexibility. You tailor the structure to your outlook and comfort level. Perhaps the most interesting aspect is how these tools let you express nuanced views that plain stock ownership can’t match.
Whatever path you choose, doing homework remains essential. Study the company’s fundamentals, track sentiment shifts, and stay aware of upcoming catalysts like earnings or partnership announcements.
Final Thoughts on Oracle’s Path Ahead
Looking back, every major tech leader has endured painful drawdowns. The ones that emerge stronger often do so because underlying demand persists while valuations reset. Oracle appears at that inflection point today—battered but building something substantial in AI infrastructure.
Whether through the risk reversal discussed or another vehicle, getting positioned thoughtfully could offer compelling asymmetry. The stock may not rocket tomorrow, but the ingredients for gradual recovery seem present. And sometimes, that’s all a savvy investor needs.
As always, these ideas reflect personal analysis and aren’t recommendations. Markets shift quickly, and individual circumstances vary widely. But exploring opportunities when others are fearful has served many well over time. Maybe Oracle deserves a second look in your watchlist.
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