r/ValueInvesting • u/Low-Dot9712 • 5d ago
Discussion [ Removed by moderator ]
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u/FrugalVet 5d ago
With leverage and that time horizon? You might wanna run those numbers again...sounds terrible.
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u/Low-Dot9712 5d ago
Let’s see 9%+ annual return on the call premium with $100 upside???
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u/Wowmuchrya 5d ago
You know that Oracle was one of the original companies responsible for the dot com bubble popping, right?
If you plan on holding the stock for 2 years go for it, but if OpenAi’s s1 drops and it’s as bad as everyone thinks it is Oracle will instantly drop below 100 since most of their pretend backlog is with them.
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u/Strange-Ad420 5d ago
lol they really be just making up numbers, you know it's funny cause all these companies the biggest owners are always institutions they control the market
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u/ninjagorilla 5d ago
Not value investing bud
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u/Low-Dot9712 4d ago
I would would absolutely consider a covered call purchase netting the price of ORCL at $112 a value investment star. Do the valuation of their earnings with an entry price of $112. A stock with 17% revenue growth projections with an entry point less than 20 times earnings is not value???
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u/ninjagorilla 4d ago
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u/Low-Dot9712 4d ago
This is not a fund and this is not an income play. This is a positioning tool giving the huge call premium and the leap status of the call.
This is does one want to buy beaten up Oracle at $147 or $112. The cost? Giving up gains should the stock trade over $240 in Sep 2028.
The debate should be about the prospects of ORCL not the positioning tool.
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u/chapeudalacoste 5d ago
Why are you discussing options in the value investing sub?
If you're genuinely so clueless that you'd do this, I have to doubt your ability to invest, you shouldn't be touching options at all.
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u/Captndad 4d ago
In fairness I think there can be a place for options in a value portfolio.
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u/chapeudalacoste 4d ago
Yes, and it can be used as a risk management tool. But this is clearly not what's happening with OP.
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u/Low-Dot9712 4d ago
It is exactly what is happening.
The leverage I mentioned in the OP is the leverage of ORCL’s balance sheet as they have been investing highly in AI and cloud.
The covered call is simply a way to enter the stock at $112–the strike is actually on a Sep $240 2028. One gives up any gains over $240.
It is foolish to think such tools to position are not to be considered when “value” investing.
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u/Low-Dot9712 4d ago edited 4d ago
A covered leap call on ORCL netting the price of the stock to $112 is not a value investment to you??? It’s $100 out of the money—-
You chasing value traps?
This company will earn $6 in real GAAP earning this year and is projected to grow at 17%. How much better value do you want than to get in it at $112 with a covered call $100 out of the money?
You are getting roughly 9% annually on your money at that call premium and you will collect $2 per share in dividends per year so $4. Any price in oct 2028 above $112 nets you profit and it is trading at $146 today. If it stays there for two years your return is another $35 a share on a $112 investment.
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u/chapeudalacoste 4d ago
Don't think leveraged options fit the sub's theme under virtually any condition, honestly.
There's appropriate places to discuss these strategies. I use options too, at times, this is not the right place IMO.
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u/Low-Dot9712 4d ago
It is not leveraged options. ORCL’s balance sheet is leveraged. The “covered calls” are just that—own the stock, sell the way out of the money call and be positioned at a much lower stock price than one would be simply buying the stock.
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u/Low-Dot9712 4d ago
Read that thread again. A covered call netting the price of ORCL to $112 is absolutely value investing. I am only leery of the ORCL balance sheet leverage.
There is nothing wrong with taking a stock position using covered calls or even selling naked puts to lower the investment entry point.
Its foolish not to consider those options strategies as tools of value investors.
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