Oracle's massive backlog fulfillment is uncertain due to financial strain, creating investor concern despite strong AI segment growth.

Oracle is taking steps to protect itself from potentially increased costs associated with its massive data center in New Mexico, according to Bloomberg.

The company issued a force majeure notice to the project developer, Blue Owl, as regulatory hurdles threaten its planned 2028 opening.

Force majeure simply means an event beyond a company's control that may prevent it from fulfilling its contractual obligations. Oracle's shares are under pressure as a result.

The company is not abandoning the site, but is simply seeking flexibility to postpone payments if the project cannot be completed on schedule .

It should be noted that this facility is considered a key part of the "Stargate" artificial intelligence development project. Oracle confirms that Project Jupiter is proceeding according to schedule.

Okay, now it's time to discuss Oracle's situation. So, before we move on to trading examples, let's hear your opinions about Oracle. I'll start with you, Kevin. What is your opinion?

But, moving on to Oracle , I think who among you had to look up the force majeure clause today?

I did. I had to find out what it was. This clause allows one party to withdraw from the deal. Oracle's subsequent comment , given the sharp drop in the share price following this news, suggests that this is common in such developments.

Therefore, they believe that it is normal in the world of business and contract law to do such things, but it is still a company with enormous opportunities in the field of artificial intelligence, such as the $664 billion share buyback deal.

But the question that is troubling Oracle, and which this news did not help today, is: Can they fulfill all these promises? Will those who are asking them provide everything necessary to complete these deals?

Will the $ 664 billion actually be paid? These are the doubts that surround everything that is happening at Oracle right now .

If they succeed in achieving their goals, if all of this is achieved, is this company considered to be undervalued? Currently, the entire company, Diane, is shrouded in mystery.

Tom, what do you think of Oracle? Well, I agree with Kevin on this point. I had to look closely at this deal as they would have to start paying Blue Awl, and that's why Blue Awl's shares also went down.

But they resorted to a force majeure clause to protect themselves from paying for the huge AI data center in New Mexico if the project is delayed due to factors beyond their control, a kind of emergency exit they use here, and this depends on the natural gas pipeline they need to run their Jupiter project in New Mexico.

This is extremely important , and do you remember when the company's stock hit an all-time high last fall and then started to decline? Everyone is worried about the huge backlog of orders at $664 billion, but how much of it will actually be fulfilled?

What obstacles will you face? Its free cash flows have been negative by billions of dollars over the past two quarters , its debt is constantly increasing, and it has fallen to the lowest credit rating (BBB-).

So now , what are the positive aspects? Well, regarding the artificial intelligence aspect of their business, it grew by 121% year-on-year in the last quarter, and 93% quarter-on-quarter .

These are the positives, but this introduces many variables into Oracle's upward trajectory. They are burdened with enormous debts. Will these partnerships and deals result in the repayment of the remaining $664 billion in performance obligations?

I think this is a source of concern for investors, and it complicates matters further.

Yes, my strategy is bullish, but it's also bearish. I'm looking for market movements. I don't know which way it will go, but when the deal is executed, you will see the direction I am leaning towards.

I used a long, unbalanced "Iron Condor" strategy, looking for moves in both directions, but I favored one over the other. Here are the execution prices. The expiry date was set for October 16th.

I gave myself a specific time limit. Then I bought a vertical call option at 145 and 155. I bought a wide vertical call option at $10. Then I bought a vertical put option at $125.

Any wide vertical put option at $5, and a wide vertical buy option at $10. I have an opinion, but I'm not sure it's correct. The price may move in either direction. This is the basic idea behind a deal like this.

Now, this deal is losing money if the stock price remains fixed at this level. Hey Tom, I paid about $2.95 for it. As you know, in a hypothetical transaction, the stock price appears to be currently trading at around $3.

The price of a vertical put option will reach its maximum at $5, so you will be profitable, but you will make a much larger profit if there is a significant price increase. The projected rise through October 16, the last time I looked, was about $14, Tom, either way.

So, I tried to be within the scope of this move, but I tipped the scales a little towards the positive side, Tom, because that's my opinion. I don't know if it's true or not, but I'm betting on a move in either direction, Tom. Yes , I'm betting on a bounce.

Remember, Kevin, about a week and a half ago the stock was above $170 before it fell back again. We are now at around $138, but let's analyze Kevin's deal. A monthly option with a date of October 16th, meaning there are only 3 weeks left until its expiry date.

Buy a call option at $145, and sell a call option at $155. So, you buy a call option (up) , and then you combine it with the purchase of a put option ( down). You buy a put option at $125, and you sell a put option at $120.

This means that the profit margin is only $5 in case of a drop. As a package, you pay less than three dollars for this, so your risk is about $295 per transaction. The breakeven point is the price you would like the stock to reach.

You can see that through the risk profile. You don't want the stock price to stay around 135, 138, 140, or even 130. You want the stock to move over the next three weeks. The break-even point is when the price drops to 122.05.

The price must fall below that, and then you will make a profit of slightly more than two dollars if the price falls below the execution price of 120. So, your profit will be less in the event of a decrease.

In the case of an upward trend, you want the price to rise above 147.05 or 147.95. This is the source of your additional profit, because you have the option to buy an upward vertical at a price of $10.

That is, you are using a long, slanted "Iron Condor" strategy , and you pay about $2.95 as a discount. If the price exceeds $155 on the expiry date within the next 22 days, you will make the maximum profit.

You will collect $500 in addition to the $205 you will receive. That is, the profit will exceed $7, or $700 if the price exceeds $155. But you definitely need a strategy for moving in this situation, knowing that you have 3 weeks in this position. A single deal combines both ups and downs.

Kevin, I've been looking at a more passive strategy, taking advantage of the decline we're seeing today by more than 4%. Looking at the situation on a weekly basis, we have fallen by more than 6% so far this week, and by about 55% from our 52- week high.

I looked at a cash-guaranteed sell option , where you are willing to buy the shares if their price drops. This option requires a large capital due to the high risk of loss. But looking at the October 9 weekly options, i.e. 15 days before the expiry date , you can sell the put option out of profit at an execution price of 132.

You will get a profit of approximately $3. It may be slightly less , as the market trend has reversed, and the S&P 500 index is almost flat now. I'll probably get around $270 right now.

But the profit you make is what you can achieve. If you make a profit of $3, that is, $300 for each put option you sell, the breakeven price will drop to $129 in case of a loss.

Therefore, there is a large margin of safety in this case. But, Kevin, you have nearly $13,000 of risk that will go down to zero if the stock price drops that low.

Yes, that's absolutely true. If you think you know, how can I explain this better? There are two different views on Oracle stock. Tom doesn't need to move. That's why he shortened his contract to October 9, because if the stock is settling at that price, you want it to happen as quickly as possible.

If the stock settles at this price, Tom will be a winner. As for me, I gave myself a little longer. Why? Because I need to move. If the stock settles at this price, I will lose money.

Meanwhile, Tom will earn the money. So, I need to make a move, but my return will be greater. Tom doesn't need to make a move, and he has a margin of loss in case he's wrong up to the execution price of 132.

So, one of them is more negative. Both of them tend slightly towards optimism. As for me, I tend to be more optimistic, but I need more action. There is a equation for risk and return.

There are trade-offs . This is what we talk about a lot in this field. Tom has absolutely zero risk in selling a short put option, just as he does when buying the stock. As for me, my risk is limited by the amount paid.

I always say that one should be careful when reaching a selling price between the two execution prices. Always be careful on this point. We say that the risk is limited, but there is a greater risk than that.

So, whether the approach is more passive or more daring, one either needs to move one's thumb or not .