Founded and still controlled by Larry Ellison, Oracle has had an extraordinary year in 2025, with its stock up 82% year to date. This surge is attributed to a substantial influx of new business stemming from the AI boom. At one point, this remarkable run made Ellison the richest person in the world, with his more than 40% stake in Oracle valued at approximately $350 billion.
On September 10, Oracle’s stock soared by 36%, marking its best daily performance since 1992, after the company announced a staggering backlog of nearly $500 billion. This backlog includes a multibillion-dollar cloud contract, driven by the increasing demand for its AI-integrated cloud infrastructure. Oracle’s cloud services are now powering AI workloads for major tech firms, including OpenAI, contributing to a remarkable increase in its market capitalization by around $244 billion. This surge pushed the stock to an all-time high of $345.72, bringing it close to a $1 trillion valuation.
As investors speculate on Oracle’s potential margins from this newfound AI business, the stock’s volatility has created a favorable environment for higher option premiums. To capitalize on this elevated premium, I am considering selling a put spread. This strategy allows investors to generate income while also being comfortable with the prospect of owning shares at current levels.
Despite Oracle’s parabolic rise, I remain interested in owning this essential stock and am open to acquiring more shares at these levels. For those who may not share my perspective, there is always the option to take the other side of this trade.
The specific trade involves selling the November 7 $300 put for $17.25 and buying the November 7 $275 put for $7.25. This credit spread generates a total of $10, or $1,000 per one lot, with Oracle trading at approximately $301 at the time of execution. If Oracle closes above $300 at expiration, the investor will collect the entire $1,000 premium. However, if Oracle settles below $300, there is a risk of being assigned the stock. The maximum loss for this trade is capped at $1,500, as the position will be stopped out at $275 due to owning the downside put.
DISCLOSURES: Kilburg sold this ORCL spread and is long Oracle. All opinions expressed by CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC Universal, their parent company, or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. The above content is subject to our terms and conditions and privacy policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to buy any security or other financial asset. The content is general in nature and does not reflect any individual’s unique personal circumstances. The above content might not be suitable for your particular circumstances. Before making any financial decisions, you should strongly consider seeking advice from your own financial or investment advisor. Click here for the full disclaimer.
