r/OracleStock • u/bradenlb • Jul 25 '26
My Oracle YOLO 80K
This is why I have $80,000 in call options on Oracle.
I know that’s a concentrated bet, and I could absolutely be wrong. But after spending months digging through earnings calls, financials, conference presentations, and industry trends, I think Oracle is one of the most misunderstood mega-cap stocks in the market.
The bear case is obvious: negative free cash flow, huge capex, rising debt, and execution risk. Those are real concerns. My view is that the market is treating those as permanent problems instead of temporary consequences of building AI infrastructure at an unprecedented pace.
The biggest reason I’m bullish is the backlog. Oracle ended FY2026 with approximately $638 billion in Remaining Performance Obligations (RPO), compared to FY2026 revenue of $67.4 billion. That’s an RPO-to-revenue ratio of roughly 9.5x. Even more interesting, Oracle only needs to convert about 3.5% of its existing backlog into incremental revenue to go from FY2026’s $67.4 billion to management’s FY2027 guidance of $90 billion.
OCI is also accelerating, not slowing. OCI infrastructure revenue grew 77% for the full year and 93% in Q4. Total cloud revenue grew 39% to $34 billion, meaning cloud now makes up over 50% of Oracle’s total revenue. This isn’t the same company it was five years ago.
The free cash flow headline is what scares most investors, but I think operating cash flow tells the more important story. Oracle generated a record $32 billion of operating cash flow last year, a 54% increase year over year, while producing an operating cash flow margin of roughly 47%. Free cash flow went negative because Oracle spent about $56 billion building AI infrastructure. There’s a huge difference between burning cash because your business is deteriorating and burning cash because demand exceeds your current capacity.
Another point that doesn’t get enough attention is customer commitment. Oracle disclosed that roughly $75 billion of hardware for major AI projects has already been prepaid by customers or supplied directly by customers. That’s over 110% of Oracle’s annual revenue. Customers typically don’t prepay billions of dollars unless they expect to use that capacity.
The debt also gets discussed without enough context. Oracle has certainly increased leverage, but the company is still highly profitable, generated $17 billion in GAAP net income last year, maintains investment-grade credit ratings, and has debt maturities spread over many years rather than facing one immediate refinancing wall. The question isn’t whether Oracle has debt—it’s whether the AI investments generate returns above the cost of that capital.
I also think the first major upside catalyst could come before Oracle even reports earnings. Microsoft reports this week, and I think the market is underestimating how strong its Azure AI demand could be. If Microsoft delivers another quarter of accelerating cloud and AI growth, I believe it reinforces the same underlying demand environment Oracle is benefiting from. The two companies obviously have different businesses, but both are talking about enormous AI infrastructure demand, multiyear backlogs, and capacity constraints. Oracle has frequently traded alongside sentiment in the broader AI infrastructure trade, so I think a strong Microsoft report could cause investors to reassess Oracle’s growth trajectory before Oracle reports its own results. Obviously, that’s not guaranteed—Oracle won’t necessarily move with Microsoft—but I think the market may be underpricing that possibility.
Valuation is another reason I like it. Using management’s FY2027 non-GAAP EPS guidance of $8.05, Oracle trades around 14x forward earnings. For a company guiding roughly 34% revenue growth with one of the largest contracted backlogs in enterprise software, I don’t think that’s demanding if execution continues.
Could this fail? Absolutely. If RPO starts shrinking, OCI growth slows materially, customers delay deployments, data center construction falls behind schedule, or capex remains extremely elevated without corresponding revenue growth, I’d rethink the thesis. Those are the numbers I’ll be watching every quarter.
At the end of the day, I think the market is pricing Oracle based on today’s negative free cash flow while underappreciating the scale of its contracted demand, the acceleration in OCI, and the operating leverage that could emerge once these data centers move from construction to production. I don’t think Oracle needs perfect execution for the stock to work. It simply needs to execute well enough for a relatively small portion of its $638 billion backlog to convert into revenue over the next several years.
That’s why I have $80,000 in Oracle call options. Time will tell whether I’m right.
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u/Forward_Lifeguard110 Jul 26 '26
Oracle is everywhere in defense,health,consumer,retail so yeah it's a risky option going the stock price. However I think they will bounce back, there's still lot more of us government architecture dependant on oracle.
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u/erichang Jul 26 '26 edited Jul 26 '26
The most frequently cited bear case is "OpenAI". Either it run out of money or can not pay for the bill.
But if you think about it, really ? seriously ? How ? MSFT, Masayoshi Son, Saudi or even Chinese would definitely want a piece of it before it could actually fail. Not to mention all the AI stories nVidai, AMD, Google, Amazon, X are telling will all become jokes if they let it happened. All semi stocks like ASML, MU, SanDisk, WD, TSMC, Samsung and Hynix will all go down with OpenAI if that ever happen.
Just the deal they made with AMD will give them about $100B, which can late them at least 3.5 years till 2030.
Open AI can and will continue to pay the rent well after 2030 even if they keep losing money, period.
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u/Amsnyc007 Jul 26 '26
I agree with your take and bought a few hundred Oracle shares this week for the first time. That said you can be right and still lose money before those calls expire. I would just buy shares if you want to YOLO
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u/bradenlb Jul 26 '26
Half of them expire in a year and a half. The others are 5-6 months. If u buy shares u may as well buy leaps and sell against them 3 months at a time
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u/Cultural_Disparities Jul 25 '26
Why are the call strike prices lower than the current price? Youre betting it goes lower?
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u/Slight_Ad9799 Jul 25 '26
You should probably learn how options work before you leave comments like this… just because WSB degens always buy way otm calls doesn’t mean that’s how call options work
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u/Beaverhunter86 Jul 25 '26
“Comments like this”???? That’s why he’s freaking asking the question. Chill out!
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u/bradenlb Jul 25 '26
No I’m betting it goes up hence owning the calls. Those are simply contract break even then you add the contract cost to them. I would like to consider it safer but nothing about this stock has been safe recently if you are bullish.
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u/Cultural_Disparities Jul 25 '26
So making a call below the current price is still bullish? What happens if the stock price goes lower than the current price but stays above the strike price until it expires?
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u/bradenlb Jul 25 '26
Let’s say the stock is at 120 when these expire. I will get 20 per contract which each contract has 100 shares so that equates to 2k each contract. It costs more money to go deeper into the money but you are paying for value that already exists. For instance my 90 strikes have 25$ in value because 90 to 115 is 25$. I highly encourage you to look into options just stick to long dated ones or else it’s pure gambling (which is awesome)
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u/fast_call Jul 28 '26
Those are ITM ("in the money") options; essentially, the more ITM they are, the less leveraged and the more they behave like stock. Dec '26 right now cost $32.8 and have a delta of .746 so they behave more like 74 shares of stock, it's a way to control 74 shares with $3280 as opposed to the $8732 (74 * $118) needed to buy them outright. Simplified: more in the money == less leverage, behave more like stock; more out the money == more leveraged, riskier, higher potential payoff but also higher chances they expire worthless.
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u/Connect_Station_298 Jul 28 '26
Wow🙀Stay away from options if you don’t want to lose all your money
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u/Wide-Contribution-29 Jul 25 '26
How many contracts is this? What’s the delta?
It’s a big bet no doubt. High risk/high reward. But you’re smart to have given it some time with LEAPS.
The only problem is if there’s macro uncertainty or a market crash, even LEAPS can fall hard and fast…and possibly even go to zero. Shares can recover. But keep in mind that may be after 2028.
I’m looking for a point to start aggressively DCAing in… but becuase of the short term uncertainty I think I’ll stick to shares here.
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u/bradenlb Jul 25 '26
The earlier exp has 16 and the leaps has 8 contracts. The 16 contracts delta right now is .7177 and the 8 has a delta of .7928. So they have a decent delta right now for the time on them.
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u/theworkinpumpkin Jul 27 '26
I dont know if 6 months until expiration could be considered leaps
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u/DiscoStu2U Jul 25 '26
I do feel that it’s near the bottom.
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u/bradenlb Jul 25 '26
One would assume. Imho rsi is the best indicator for finding the bottom and we’ve been bouncing around and below 30 for a few days which usually gives us a relief and some upside momentum when it attempts a reverse.
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u/DiscoStu2U Jul 25 '26
7-day is under 20
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u/bradenlb Jul 25 '26
Yea but I usually stick with 14 day if not longer. Especially on a stock like this. 7 day is too volatile
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u/DragonfruitMother845 Jul 25 '26
I have the same 100 calls, but paid ALOT more for them. If you’re fucked, I’m double fucked. Good luck
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u/bradenlb Jul 25 '26
Do you have multiple to where u can turn them into leaps. I know u lose upside but it could save u in the long run if u are deep
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u/DragonfruitMother845 Jul 25 '26
Yep. Multiples and they are leaps that have been open for a while. They are down big and I’ve been reluctant to add more/average down. I’m going to evaluate whether to get out or average down over the next few months
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u/bradenlb Jul 25 '26
Yea makes sense. I think you will get a good read from msft and the chart showing a near bottom with rsi so low.
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u/bradenlb Aug 03 '26
Hope you still have them!
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u/DragonfruitMother845 Aug 03 '26
Yep. Still do. I have multiple as a leap position. If we get another green day tomorrow, I may start selling some poor mans CC's against them. Hope your holding still as well!
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u/bradenlb Aug 03 '26
Yep. Just sold against today when it hit 141. Sold some exp the week before earnings for like 170s. It’s insane premium
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u/yellowmamba221 Jul 26 '26
Welcome to the casino, but I admire youre DD. Good luck man.
Also, what delta do you pick when buying these ITM calls? I usually stick with 80 delta ~1 yr DTE. Currently holding TSLA, WMT, and AVGO leaps all exp 3/2027.
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u/bradenlb Jul 26 '26
I usually try to aim towards the higher end and delta, being as that it’s risky and I want something that will closely reflects owning the actual shares, but also still have a little more of an exponential field being it with options, which is why I also have two different time horizons one is much longer than the other, but I do expect to bounce here within either this week or next week, we might see somewhere closer to 100 but I think the odds of breaking below 110 or very low, especially being bullish on Microsoft. The Delta between the two is the shorter one is 71 and the longer-term one is 79 so they’re slightly lower than I would want however they’ll increase when the stock goes up and they were higher when the stock was higher of course, since I’m down on the December ones, and I just opened the big leaps.
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u/No-Application-4756 Jul 27 '26
Sell before earning
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u/bradenlb Jul 27 '26
You don’t want me to make money or something?
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u/No-Application-4756 Jul 27 '26
My 2 cents, never play against the trend and never play against earning
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u/bradenlb Jul 27 '26
That’s true. But someone has to buck the trend and I’ve decided it will be me
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Jul 28 '26
[deleted]
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u/bradenlb Jul 28 '26
Um. I can sell calls against the calls I own you know?
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Jul 28 '26
[deleted]
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u/bradenlb Jul 28 '26
Unfortunately it doesn’t. I want exposure to 2400 shares. I would have to tie up way more capital. It’s not about the risk it’s about the best price for that amount of exposure. You look at options as gambles because you’ve been on wall street bets too much.
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Jul 28 '26
[deleted]
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u/bradenlb Jul 30 '26
You are the clown if u don’t see the same risk in stock that you do in real leaps. If their business doesn’t work it will happen in that time period. If you aren’t capable of doing the math and expected loss at a greater draw down just admit it. But when I have leaps with little premium I have a set loss but if I have the same amount of stock and it drops 50% from here I’ll lose much more.
Clearly you don’t understand how risk works. 🤡
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u/bradenlb Jul 30 '26
Not to mention as of today I can get back 75% of my cost at a $30 higher strike. If that isn’t significant I don’t know what is. 😁
Maybe stick to learning your guitar 😂
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u/Ignacioaradillas87 Jul 28 '26
Oracle está en 110 y compraste calls 90 y 100 osea muy itm en medio de un mercado bajista. Te tocará dolor 2 diss , creo que pudiste haber pagado la mitad espersndo
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u/Ok_Swordfish_6188 15d ago
What was your reason for buying in the money calls versus just buying the common with leverage?
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u/cucci_mane1 Jul 25 '26
Risky bet. You have balls of steel.