2. Understanding expected movement around earnings

Before earnings, investors often disagree on what results will show. Because of this uncertainty, prices usually move more than normal right after the announcement.

Options markets allow us to estimate how large this move might be. This estimate is known as the expected move. It is not a prediction, but simply reflects how much price change is currently being priced into options.

For Oracle, options expiring this week suggest the share price could move about USD 20 in either direction. With the stock trading near USD 221, the market is preparing for a possible range of roughly USD 200 to USD 241 by the end of the week.

For a long‑term investor, this highlights the challenge: buying shares before earnings means accepting the full uncertainty of that range.

3. Setting your preferred entry level

Many long‑term investors like Oracle’s long‑term story but prefer to buy the shares only if they fall to a more comfortable price. In the stock market, this is usually done with a limit order, which instructs the system to buy shares only if the price drops to a chosen level.

There is also a listed instrument that formalises this idea and pays a small amount upfront for taking on the commitment to buy. It essentially works like this:

“I am willing to buy Oracle at my chosen price, and in return I receive a payment today for accepting this obligation.”

This is achieved by selling a type of option. The example below illustrates how it works. This is educational only and not a suggestion to trade.

4. Example: committing to buy Oracle at USD 195 (illustrative only)

Important note: The strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it's crucial to make informed decisions.

Suppose an investor wants to buy Oracle but only if it falls to USD 195, rather than buying at the current price of USD 221. There is an option contract that allows this investor to commit to buying 100 shares at USD 195 if the price falls below that level by the end of the week.

In return, the investor receives about USD 2.75 per share (around USD 275 in total). Relative to the USD 19,500 set aside, this represents a short‑term yield of roughly 1.4% for the week (simply 275 ÷ 19,500). This high percentage is the result of earnings‑related volatility and should not be viewed as a regular or repeatable return. The investor must set aside USD 19,500 to buy the shares if required.

This structure is known in options terminology as a cash‑secured put, though remembering the term is not necessary to understand the basic idea.

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5. What can happen after earnings?

Here are three simplified outcomes for this week’s contract:

1) Oracle stays above USD 195

You keep the payment, and no shares are purchased. The commitment simply expires.

2) Oracle finishes slightly below USD 195

You buy 100 shares at USD 195, and the payment received reduces your effective cost to about USD 192.25.

3) Oracle falls sharply

You still buy at USD 195, even if the market price is much lower. This is the key risk: a large earnings‑related drop results in a larger loss compared with waiting.

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6. Educational considerations

The structure described above is sometimes used by investors who:

• Already want to own Oracle for the long term.
• Prefer to define an entry price rather than buy before earnings.
• Can reserve the cash needed to buy 100 shares.

This is not guidance on suitability. Whether any approach is appropriate depends entirely on an individual investor’s situation, objectives and risk tolerance.

From an educational standpoint, this structure conceptually highlights two features:

• You define your entry price in advance.
• You receive a payment for taking on the commitment.

7. Common questions

What is this approach called?
In options language, it is known as a "cash‑secured put." It represents a commitment to buy shares at a chosen price, backed by cash.

Is this safer than buying shares before earnings?
It may avoid buying at a higher level, but it does not protect against a large drop. If the price falls sharply, you still buy at your chosen level.

8. Key takeaways (educational only)

• Oracle’s earnings may lead to a significant price move.
• Investors can think about defining the price at which they would be comfortable buying.
• There is a mechanism that formalises that commitment and provides a payment for taking it on.
• The main risk is that the share price may fall far below the chosen level, especially during earnings.