Investment Review №329. It's time to take a risk
LONG CALL ON ORCL
Investment Rationale
Oracle Corporation (ORCL) ranks among the leading global providers of enterprise software and cloud services. Its primary business segments include enterprise databases, cloud platform services (Oracle Cloud Infrastructure or OCI), and scalable solutions for artificial intelligence and big data. Oracle has exhibited substantial growth in orders under long-term contracts (remaining performance obligations or RPO) and is actively investing in data center construction and cloud infrastructure expansion. These initiatives necessitate significant capital investments and precise project execution to uphold profitability.
Investment Idea
Purchasing a call option with a $300 strike price represents a strategic bullish position aimed at validating and capitalizing on a favorable outlook for Oracle's cloud division: sustained robust contract inflows, heightened monetization of AI services, and manageable free cash flow dynamics given the current capital expenditures. The December 19 expiration date offers a timeframe to confirm contract execution and observe initial indications of margin enhancement. The risk is initially contained to the premium paid for the option.
| Strategy | Long Call |
| Ticker of the Underlying | ORCL |
| Recommendation | BUY |
| Strike and Option Type | CALL $315 |
| Expiration Date | 19.12.2025 |
| Current Price (Mid) | 32,50 |
| Strategy Cost | $3250 |
| Greek Parameters | Delta – 0,542 Gamma – 0,047 Vega — 0,607 Theta – -0,021 |
| Implied Volatility | 55% |
| Realized | 1М – 132,17% 3М – 81,43% 6М – 68,95% 12М – 57,29% |
P/L of the option strategy
Trade Parameters
| Strategy | Long Call on ORCL |
| Strike | Long CALL 315 |
| Buying | +ORCL*FCJ315 |
| Exp Date | 19.12.2025 |
| Margin Requirement | $3250 |
| Entry Price | $4500 |
| Max Prifit | $Inf |
| Max Loss | $(3250) |
| Expected return | 38% |
| Breakeven Point | $347,50 |
Position Management
On the expiration date of 19.12.25, if the underlying asset’s price is higher $315 but below $347,50, the investor will incur a variable loss. Conversely, if the asset’s price below $315, the investor will experience a maximum loss of $3250. Should the underlying asset’s price exceed the breakeven point of $347,50, the potential profit is unlimited. However, we advise closing the position when the call option’s value reaches $4500.