If ever there were a stock that captured the hopes and fear of the AI trade, it’s Oracle.
Shares have fallen 17% year to date and have lost over half their value from their 52-week highs. Still, options traders are betting on a big move when it reports earnings after the bell Thursday.
Current options prices are implying a move of around 11%. While this might sound like a lot, Oracle has had an average earnings move of 9.5% over the last three quarters. This 11% expected earnings move is elevated compared to recent realized moves, but only moderately.
Looking further back to September of 2025 shows additional evidence why traders are pricing in such a large move. The stock famously shot up 35% when it reported earnings that day, blowing past investor expectations. That 11% range reflects a market weighing several things at once: Oracle’s recent history of sharp post-earnings moves, memories of the September 2025 blowout, and the CPI report landing the following morning.
Oracle, YTD
When looking into how Oracle’s options are trading, an interesting story emerges. There has been notable call-side activity in Oracle, with significantly larger clusters of open interest (or active option contracts) on the call side compared to the put side. Additionally, calls trading within the expected range are trading at much richer premiums compared to equidistant puts leading up to earnings.
For example, in the September 11th weekly Oracle contracts as of market close on September 9th, the 144 strike puts ($17.71 from the stock price) were trading around $2.34 while the 180 strike calls ($18.28 from the stock price) were trading at $3.90.
This means that investors are paying more for upside exposure compared to downside protection. This is the reverse of the pattern we often see in equities markets, where that downside protection typically costs more. This is also a trend we’ve been observing in Oracle leading up to earnings over the last year, and one that has gotten much more pronounced within the last week.
We could be seeing this for a couple of reasons, for example:
1. Oracle has had some nice momentum leading into earnings. With the stock already up 15% in the last week, this could be investors trying to capture that.
2. Oracle has a recent history of explosive moves to the upside following earnings, and options traders may be worried about missing the potential upside.
3. With the stock coming off 52-week lows in July, it could be genuine optimism about the trajectory of the company.
This earnings cycle, Microsoft and Amazon were examples of the market responding positively to AI investments paying off. Amazon shares jumped over 15% following earnings after reporting strong revenue growth that backed up their AI investments. Microsoft jumped around 15.5% after showing its future bookings were growing sharply, easing concerns that its AI spending was outpacing demand. Investors may be feeling optimistic about Oracle’s massive AI infrastructure investment paying off, too. But the bigger question for Oracle is whether it can keep funding that buildout without further financial strain.
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