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By Ainvest in options —

🔥 ORCL $20M Diagonal Put Spread - Smart Money Hedging AI Hype Collapse! 📉

A major institutional trade worth $20M just hit the tape. See the full strategy breakdown, technical levels, and trading ideas inside.

🔥 ORCL $20M Diagonal Put Spread - Smart Money Hedging AI Hype Collapse! 📉

📅 November 25, 2025 | 🔥 Unusual Activity Detected

🎯 The Quick Take

Someone just dropped $20 MILLION on a sophisticated put spread in Oracle at 9:52 AM this morning! This massive trade bought 8,595 contracts of December $185 puts while simultaneously selling the same size in March $160 puts - a classic diagonal spread that screams "I'm worried about downside but want to make money doing it." With ORCL trading at $189.64, down 39% from its September AI-fueled peak of $327, this institutional player is positioning for further pain while collecting premium. Translation: Smart money thinks Oracle's AI party isn't over - but the hangover is real!

📊 Company Overview

Oracle Corporation (ORCL) is a global technology powerhouse specializing in enterprise software and cloud infrastructure:
- Market Cap: $552-571 billion
- Industry: Cloud Computing & Database Software
- Current Price: $196.04 (as of November 25, 2025)
- Primary Business: Cloud infrastructure (OCI), database software, enterprise applications (ERP, HCM, SCM)
- Key Catalysts: Massive AI infrastructure contracts with OpenAI ($300B over 5 years), Meta ($20B), and xAI driving unprecedented growth

💰 The Option Flow Breakdown

The Tape (November 25, 2025 @ 09:52:08):

Time Symbol Side Buy/Sell Type Expiration Premium Strike Volume OI Size Spot Option Price Option Symbol
09:52:08 ORCL MID BUY PUT 2025-12-19 $11M $185 9.2K 11K 8,595 $189.64 $12.35 ORCL20251219P185
09:52:08 ORCL MID SELL PUT 2026-03-20 $9.1M $160 8.8K 4.6K 8,595 $189.64 $10.60 ORCL20260320P160

🤓 What This Actually Means

This is a diagonal put spread - one of the more sophisticated bearish strategies in the options playbook! Here's what went down:

Leg 1 (BUY $185 Puts - December 19):
- 💸 Premium paid: $11M ($12.35 per contract × 8,595 contracts)
- 🎯 Strike distance: Only $4.64 below current price (2.4% OTM)
- ⏰ Time to expiration: 24 days
- 📊 This leg profits if: ORCL drops below $185 by December expiration

Leg 2 (SELL $160 Puts - March 20, 2026):
- 💰 Premium collected: $9.1M ($10.60 per contract × 8,595 contracts)
- 🎯 Strike distance: $29.64 below current price (15.6% OTM)
- ⏰ Time to expiration: 115 days (91 days longer than the bought puts)
- 💵 This leg collected cash to: Reduce the cost of the bearish bet

Net Cost of Position: $1.9M ($11M paid - $9.1M collected)

What's really happening here:
This trader is betting that ORCL drops toward $185 by December 19 (December earnings date!) while selling far out-of-the-money protection to finance the trade. The diagonal spread structure means they're targeting a near-term decline while believing the stock stabilizes above $160 longer-term. The timing is surgical - positioned right into Q2 FY2026 earnings on December 15, just 20 days away.

Unusual Score: 🔥 EXTREMELY UNUSUAL (13.11x and 19.48x average size on each leg) - This happens a few times per year! The simultaneous execution of both legs at identical sizes confirms this is a single sophisticated institutional strategy, not random retail flow.

📈 Technical Setup / Chart Check-Up

YTD Performance Chart

ORCL Ytd Chart

ORCL is up +19.8% YTD but has crashed from its September peak. The chart tells a boom-and-bust AI infrastructure story - after surging to an all-time high of $327.76 on September 10 following the massive $300B OpenAI contract announcement, ORCL has plummeted 39% to current levels around $200.

Key observations:
- 📉 Brutal correction: Down 39% from September high of $327.76 in just 10 weeks
- 🎢 Extreme volatility: Stock went from $125 low to $327 peak to $200 current - massive whipsaws
- 📊 Volume spike patterns: Huge volume at the September peak followed by sustained selling pressure
- ⚠️ Downtrend intact: Lower highs and lower lows since September suggest momentum remains bearish
- 🔄 Support test: Currently testing the $195-200 zone - breakdown could accelerate selling

Gamma-Based Support & Resistance Analysis

ORCL Gamma Sr

Current Price: $198.51

The gamma exposure map reveals critical battlegrounds where options positioning creates price magnets:

🔵 Support Levels (Put Gamma Below Price):
- $195 - Strongest nearby support with 8.7B total gamma exposure (1.8% below current)
- $190 - Major floor with 11.4B gamma - dealers will buy dips here (4.4% below)
- $185 - Secondary support at 6.6B gamma (6.9% below) - THIS IS THE BOUGHT PUT STRIKE!
- $180 - Deep support with 7.6B gamma (9.4% below)
- $170 - Last major defense at 3.5B gamma (14.4% below)

🟠 Resistance Levels (Call Gamma Above Price):
- $200 - Immediate ceiling with 23.4B gamma (0.7% above) - strongest level by far!
- $205 - Secondary resistance at 4.5B gamma (3.2% above)
- $210 - Major resistance zone with 11.1B gamma (5.7% above)
- $220 - Extended resistance at 12.0B gamma (10.7% above)
- $230 - Upper ceiling with 9.0B gamma (15.8% above)

What this means for traders:
The gamma data shows ORCL is pinned just below the massive $200 resistance wall (23.4B gamma - the strongest level on the entire board!). Market makers holding these positions will hedge by selling stock as price approaches $200, creating natural resistance. The $185 support level (bought put strike in this trade) has 6.6B gamma, suggesting the trader picked a level with some technical significance. Notice the net GEX bias is Bearish (71.4B call gamma vs 104.1B put gamma) - more put positioning overall suggests institutional traders are defensive.

Critical insight: The fact that $200 has such massive gamma concentration means ORCL is likely to struggle breaking above this level without a major catalyst. Conversely, if $195 support breaks, the next stop is $185-190 where this diagonal spread is positioned to profit maximally.

Implied Move Analysis

ORCL Implied Move

Options market pricing for upcoming expirations:

  • 📅 Weekly (Nov 28 - 3 days): ±$7.23 (±3.69%) → Range: $188.81 - $203.28
  • 📅 Monthly OPEX (Dec 19 - 24 days): ±$24.84 (±12.67%) → Range: $171.20 - $220.89
  • 📅 Quarterly Triple Witch (Dec 19 - 24 days): ±$24.84 (±12.67%) → Range: $171.20 - $220.89
  • 📅 Yearly LEAPS (Dec 18, 2026 - 388 days): ±$70.36 (±35.89%) → Range: $125.69 - $266.40

Translation for regular folks:
Options traders are pricing in a 3.69% move ($7) by this Friday and a massive 12.67% move ($25) through December expiration. That December range is HUGE - it's pricing in serious volatility! The market thinks there's a real chance ORCL trades anywhere from $171 to $221 by December 19th earnings.

The December 19th expiration (when the bought puts expire) has a lower range of $171.20 - meaning the market sees about a 16% chance ORCL drops below that level. The bought $185 puts are well within the expected move, giving this trade solid probability of profit if the bearish thesis plays out. The upper range of $220.89 aligns perfectly with the gamma resistance we're seeing at $220.

Critical timing note: Oracle reports Q2 FY2026 earnings on December 15 - just 4 days before the December 19 expiration! This trade is a direct bet on earnings weakness or disappointing guidance.

🎪 Catalysts

🔥 Immediate Catalysts (Next 30 Days)

Q2 FY2026 Earnings - December 15, 2025 (20 DAYS AWAY!) 📊

Oracle will report fiscal Q2 2026 results on December 15, 2025. This is the single most important catalyst for this options position:

Why this matters for the trade: If Oracle disappoints on cloud growth, provides weak guidance, or investors focus on cash burn from massive capex, the stock could easily test $185 or lower by December 19 expiration. The diagonal spread is perfectly positioned for this scenario.

🚀 Recent Catalysts (Already Happened)

OpenAI Partnership - $300 Billion Deal (September 2025):

Oracle secured a five-year, $300 billion agreement with OpenAI for AI infrastructure - one of the largest cloud contracts in history:

Q1 FY2026 Results - Mixed (September 9, 2025):

Oracle delivered strong cloud growth but missed earnings:

Meta AI Cloud Deal - $20 Billion (In Negotiations):

Oracle in advanced discussions with Meta Platforms for a $20 billion AI cloud deal, though finalization status remains unclear as of November 2025. CEO Safra Catz confirmed contracts with "the who's who of AI, including OpenAI, xAI, Meta, NVIDIA, AMD, and many others."

📅 Upcoming Catalysts (Q1-Q2 2026)

Oracle AI Database 26ai General Availability (Ongoing Rollout):

Oracle's flagship AI-native database platform announced in October 2025:

  • Key Features: AI Vector Search, autonomous lakehouse supporting Apache Iceberg format, agentic AI workflows
  • Availability: Available on all four major hyperscalers (OCI, AWS, Azure, Google Cloud)
  • Pricing: Advanced AI features included at no additional charge
  • Revenue Impact: Oracle projects database revenue to reach $20 billion within five years

AMD MI450 Series Supercluster - 50,000 GPUs (Q3 2026 Launch):

Oracle will be first hyperscaler to offer AI supercluster powered by 50,000 AMD Instinct MI450 GPUs:

NVIDIA OCI Zettascale10 - 800,000 GPUs (H2 2026):

Oracle announced OCI Zettascale10 enabling customers to configure AI environments with up to 800,000 NVIDIA GPUs:

⚠️ Risk Catalysts (Negative)

Massive Capex Burden - $35 Billion FY2026:

Oracle's $35 billion FY2026 capex represents a "bet the farm" strategy:

Valuation Concerns:

  • Forward P/E: 28-41x (sources vary) well above 5-year average of 19.36
  • EV/EBITDA: 25.67-29.29, in "Strongly Overvalued" range vs 5-year average of 14.04
  • 39% decline from September peak suggests market already repricing AI growth expectations

Security Breach - January 2025:

Significant security breach exploiting Java vulnerability affected over 140,000 Oracle Cloud tenants, leading to CISA guidance and lawsuits.

🎲 Price Targets & Probabilities

Using gamma levels, implied move data, and upcoming catalysts, here are the scenarios for the December 19 expiration timeframe:

📉 Bear Case (45% probability) - This is what the diagonal spread is betting on!

Target: $175-185

How we get there:
- 😰 Q2 earnings disappoint on December 15 or guidance is weak
- 🇨🇳 Concerns about OpenAI's funding capacity for $30B annual payments resurface
- 💸 Investors focus on negative free cash flow from $35B capex and rising debt levels
- 📊 Cloud growth decelerates from 58% pace, raising questions about sustainability
- 🎯 Stock breaks $195 support, accelerates to $185 bought put strike
- 💰 Meta deal ($20B) fails to materialize or gets delayed

Max profit zone: The diagonal spread profits maximally if ORCL is at exactly $185 at December 19 expiration. At this price, the bought puts are worth ~$18.50 (intrinsic value) while the sold $160 puts expire worthless (stock still above $160). Net profit would be approximately $6-7M on the $1.9M initial investment - a 300%+ return!

Key insight: The implied move range of $171-221 for December expiration gives this bear case legitimate probability. The stock only needs to drop 6-7% from current levels to hit the target.

🎯 Base Case (35% probability)

Target: $190-200 range

Most likely scenario:
- ✅ Earnings meet expectations but don't excite (similar to Q1's $0.01 miss)
- 📊 Cloud growth strong (50%+ OCI) but deceleration from 58% raises concerns
- ⚖️ Market remains in "show me" mode on AI contract monetization
- 🔄 Trading between gamma support ($190-195) and resistance ($200)
- 💰 $455B RPO backlog acknowledged but revenue conversion timeline remains distant (2028+)

Impact on trade: Moderate profit. If ORCL ends at $190, bought puts worth ~$10 (intrinsic + time value decay), sold puts worth ~$8. Net value ~$2 vs $1.75 initial cost = small gain. Not the home run scenario, but still profitable.

📈 Bull Case (20% probability) - Pain for this trade!

Target: $210-220

What could go right:
- 🚀 Blowout earnings with accelerating cloud growth (65%+ OCI)
- 💪 Strong guidance citing GPU supply improvements and capacity expansion
- 📱 New mega-contract announcements (Meta $20B finalizes)
- 🤖 Positive AI Database 26ai adoption metrics
- 📈 Breaks through $200 resistance on sustained buying
- ⚡ Multiple analysts raise price targets back toward $300+

Impact on trade: Maximum loss. Both puts lose value as stock rallies. Bought $185 puts become worthless ($0), sold $160 puts also worthless. Net loss = $1.9M initial cost. However, the diagonal structure limits losses - unlike buying puts outright, the premium collected from the short leg reduces maximum pain.

Why low probability: Stock is down 39% from peak, valuation concerns persist, and OpenAI funding skepticism remains. Would need multiple perfect catalysts to break the current bearish trend.

💡 Trading Ideas

🛡️ Conservative: Wait for Earnings Clarity

Play: Stay on sidelines until after December 15 earnings

Why this works:
- ⏰ Earnings in 20 days creates binary event risk - too much uncertainty
- 💸 Implied volatility elevated (12.67% expected move) - options expensive pre-earnings
- 📊 Stock in clear downtrend from September peak - don't fight the tape without catalyst
- 🎯 Better risk/reward after earnings when direction becomes clearer
- 📉 If stock drops to $175-180 post-earnings, better entry for long positions

Action plan:
- 👀 Watch December 15 earnings closely for OCI consumption growth, RPO additions, and guidance
- 🎯 Look for breakdown below $195 support or breakout above $200 resistance for directional conviction
- ✅ Confirm cloud metrics sustain 50%+ growth before committing bullish capital
- 📊 Monitor analyst reactions and whether OpenAI funding concerns are addressed

Risk level: Minimal (cash position) | Skill level: Beginner-friendly

⚖️ Balanced: Directional Put Spread (Follow Smart Money)

Play: Buy bearish put spread targeting earnings weakness

Structure: Buy $190 puts, Sell $180 puts (Dec 19 expiration)

Why this works:
- 🎯 Follows institutional flow - mimicking the diagonal spread's bearish directional bias
- 📊 Defined risk spread ($10 wide = $1,000 max risk per spread)
- 💰 Targets $190 support level (major gamma concentration at 11.4B)
- ⏰ Expires December 19 - captures earnings volatility on December 15
- 📉 Profits if ORCL tests $185 support zone as institutional trade suggests
- 🛡️ Limited risk vs buying puts outright

Estimated P&L (current market prices):
- 💸 Net debit: ~$4-5 per spread ($400-500 per contract)
- 📈 Max profit: $500-600 if ORCL at/below $180 at expiration (100%+ return)
- 📉 Max loss: $400-500 if ORCL above $190 (defined and limited)
- 🎯 Breakeven: ~$185-186

Entry timing: Enter now or on any bounce toward $200 resistance

Risk level: Moderate (defined risk) | Skill level: Intermediate

🚀 Aggressive: Sell Call Spreads Into Resistance (ADVANCED ONLY!)

Play: Sell bear call spread at $200 resistance

Structure: Sell $200 calls + Buy $205 calls (Dec 19 expiration)

Why this could work:
- 💪 Massive gamma resistance at $200 (23.4B - strongest level!)
- 📊 Stock failed to break $200 multiple times in November
- ⏰ Theta decay accelerates as expiration approaches - collect time premium
- 🎯 Betting on range-bound or bearish action into earnings
- 💸 Collect premium upfront, profit if ORCL stays below $200

Why this could blow up (SERIOUS RISKS):
- 💥 Earnings beat could blast through $200 instantly
- 🚀 Surprise Meta deal announcement or AI contract news could gap stock higher
- 😱 Selling calls in beaten-down stock ($200 to $327 in September) - catch a reversal and you're toast
- ⚠️ Assignment risk if stock rallies above $200 before expiration
- 💰 Max profit limited to premium collected (~$200-300), but losses can be much larger

Estimated P&L:
- 💰 Collect: ~$2-3 premium per spread ($200-300 credit)
- 📈 Max profit: $200-300 if ORCL below $200 at Dec 19 expiration
- 📉 Max loss: $300-200 if ORCL above $205 (500% of premium collected)
- ⚠️ Loss accelerates beyond $205: Every $1 move = $100 loss per spread

Risk level: HIGH (credit spread with limited profit, larger risk) | Skill level: Advanced only

⚠️ WARNING: DO NOT attempt this trade unless you:
- Understand gamma resistance and how it can fail at earnings
- Can handle assignment of short calls (obligation to sell shares at $200)
- Have sufficient margin and can actively monitor position
- Accept that max profit is 1/2 to 1/3 of max loss - need high win rate

⚠️ Risk Factors

Don't get caught by these potential landmines:

  • ⏰ Earnings binary event in 20 days: Results on December 15 create significant volatility risk. Stock could gap 10%+ either direction based on cloud growth metrics and guidance. Historical precedent shows Oracle can move violently on earnings surprises.

  • 💸 Cash flow negative for first time in decade: Oracle's aggressive $35B capex spending turned free cash flow negative for first time since 2014. Rising debt levels ($18B raised, $38B more discussed) increase financial leverage and interest expense burden during uncertain macro environment.

  • 🎯 OpenAI funding uncertainty: Market skepticism about OpenAI's ability to fund $30B annual payments has been primary driver of 39% stock decline from September peak. Contract doesn't hit books until 2028, creating multi-year execution risk.

  • 📊 Valuation stretched despite correction: Even after 39% decline, Oracle trades at 28-41x forward P/E vs 5-year average of 19.36x. EV/EBITDA of 25-29x ranks worse than 75% of software peers. Limited margin for error if growth disappoints.

  • 🔐 Security and regulatory risks: January 2025 breach affecting 140,000+ cloud tenants led to lawsuits and CISA guidance. Aggressive Java licensing audits alienating customers. Government contract vulnerability (DoD cuts).

  • 🤖 AI spending scrutiny mounting: Market concerns about sustainability of AI infrastructure spending intensified in November 2025. If enterprise customers slow AI project spending due to economic uncertainty or ROI questions, Oracle's $35B capex bet could backfire spectacularly.

  • 📉 Technical breakdown risk: Stock trading below all major moving averages in clear downtrend. Break of $195 support could trigger technical selling and test $185 quickly. Momentum remains bearish with lower highs and lower lows since September.

  • ⚖️ Competition from hyperscalers: Despite 1,529% multicloud revenue growth, Oracle's market share stuck at 3% vs AWS (30%), Azure (20-25%), Google Cloud (13%). "Big Three" control 63% of market with deeper relationships and broader services.

  • 💰 RPO conversion uncertainty: While $455B RPO (up 359%) sounds impressive, backlog doesn't guarantee revenue realization. Projects can be delayed, scaled back, or cancelled. OpenAI contract not converting until 2028 at earliest.

🎯 The Bottom Line

Real talk: A sophisticated institutional trader just dropped $20M on a bearish diagonal spread heading into Oracle's December 15 earnings. This isn't some retail panic - it's a calculated bet that ORCL's AI hype has gotten ahead of reality and the stock needs to digest its 39% correction further before stabilizing.

What this trade tells us:
- 🎯 Smart money expects ORCL to test $185 (or lower) by December 19 expiration
- 💰 They're willing to risk $1.9M net to make potentially $6-7M if thesis plays out (300%+ return)
- ⚖️ The diagonal structure shows they believe downside to $185 is likely, but catastrophic collapse below $160 is not (hence selling the $160 puts to collect premium)
- 📊 Timing into earnings (December 15) suggests this is an event-driven trade, not a long-term structural bear bet
- 🔄 This is hedging or profit-taking on existing long positions, not outright speculation

If you own ORCL:
- ⚠️ Consider trimming 25-50% before December 15 earnings given execution risks
- 📊 Strong gamma resistance at $200 and technical downtrend suggest limited near-term upside
- ⏰ Hold remaining position only if you believe in the 5-year AI infrastructure thesis and can stomach 10%+ earnings volatility
- 🎯 If earnings beat and stock breaks above $205-210, momentum could shift bullish
- 🛡️ Set mental stop at $190 (major gamma support) to protect remaining capital

If you're watching from sidelines:
- ⏰ December 15 after close is the moment of truth - mark your calendar!
- 🎯 Post-earnings drop to $175-185 would be attractive entry for long-term bulls (OpenAI $300B contract, AMD 50K GPUs 2026, NVIDIA 800K GPUs H2 2026)
- 📈 Looking for confirmation of sustained 50%+ OCI growth, improving free cash flow trajectory, and customer contract additions
- 🚀 Longer-term (6-12 months), AI infrastructure buildout and database revenue scaling to $20B are legitimate re-rating catalysts for ORCL
- ⚠️ Current setup favors bearish/neutral positioning into earnings - be patient

If you're bearish:
- 🎯 This diagonal spread validates the bearish thesis - follow smart money
- 📊 First support at $195 (8.7B gamma), major support at $190-185 zone
- ⚠️ Entry now or on any rally toward $200 resistance offers good risk/reward for put spreads
- 📉 December 19 expiration captures earnings event - ideal timeframe for directional trades
- ⏰ Timing is critical: Position before December 10 to capture elevated IV before earnings crush

Mark your calendar - Key dates:
- 📅 November 28 (Thursday) - Weekly options expiration (3 days away)
- 📅 December 15 (Sunday) after market close - Q2 FY2026 earnings report (20 days away!)
- 📅 December 16 (Monday) - Post-earnings price discovery and volatility
- 📅 December 19 (Thursday) - Monthly OPEX, expiration date for this $20M diagonal spread
- 📅 Q3 2026 (July-September) - AMD MI450 50,000 GPU supercluster deployment begins
- 📅 H2 2026 (July-December) - NVIDIA Zettascale10 800,000 GPU infrastructure launches
- 📅 2028 - OpenAI $300B contract expected to start hitting Oracle's books

Final verdict: This diagonal put spread is a textbook "reality check" signal from institutional money. Oracle's AI story is real - the $455B RPO backlog and mega-contracts prove that. But the stock ran too far, too fast (to $327) and the market is now demanding proof of execution, not promises. The 39% correction has been brutal, but this trade suggests it's not done yet. Expect more pain into December 15 earnings unless Oracle delivers a knockout quarter that addresses cash flow, contract conversion, and growth sustainability concerns. The smart money is positioned for $175-185 - and they're betting $20M they're right.

Disclaimer: Options trading involves substantial risk of loss and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. The unusual score reflects this specific trade's size relative to recent history - it does not imply the trade will be profitable or that you should follow it. Always do your own research and consider consulting a licensed financial advisor before trading. Earnings create binary event risk with potential for significant gaps either direction. Diagonal spreads are complex strategies requiring understanding of multiple moving parts including time decay, volatility, and strike selection.

About Oracle Corporation: Oracle is a global technology leader with a $552-571 billion market cap, specializing in cloud infrastructure, database software, and enterprise applications in the Cloud Computing & Database Software industry. The company is executing a massive $35 billion infrastructure buildout to capture AI workload growth, with landmark contracts including OpenAI ($300B over 5 years) and potential Meta deal ($20B).

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