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Oracle: how long-term investors can earn extra income after the stock's big move
Koen Hoorelbeke
Investment and Options Strategist
Summary: Oracle’s recent surge and high options premiums open the door for conservative investors to generate extra income with a covered call. This article explains how long-term shareholders can use this strategy to get paid while holding, with clear numbers and real scenarios.
Oracle covered call: how long-term investors can earn extra income after the stock’s big move
On 9 September, Oracle surprised the market with exceptionally strong quarterly results. The stock jumped about 36% in a single day—a very rare move for such a large, established company.
Even after a slight pullback, Oracle shares are still trading much higher than they were just weeks ago. The company remains in the news, with reports suggesting it could play a role in the U.S. government's restructuring of TikTok. With so much attention and price movement, options prices are still elevated, giving long-term investors a chance to earn income on their existing shares.
One way to do this: a covered call.
What is a covered call?
A covered call is a conservative options strategy that allows you to collect extra income from shares you already own.
Here’s how it works:
- You own at least 100 shares of Oracle.
- You sell a call option, which gives someone else the right (but not the obligation) to buy your shares at a set price (called the “strike price”) before a certain date.
- In return, you get paid upfront (this is called the premium).
- If the stock stays below the strike price, you keep your shares and the premium.
- If it goes above, you may have to sell your shares at the strike price, but still keep the premium.
Think of it as renting out your shares for a month: if nothing happens, you keep the rent and your shares.
Important note: The strategies and examples described are purely for educational purposes. They assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor must conduct their own due diligence, considering their financial situation, risk tolerance, and investment objectives before making decisions. Remember, investing in the stock market carries risks, so make informed decisions.
A real example with Oracle
Let’s say you already own 100 shares of Oracle, which is now trading at USD 301.65.
You sell the USD 360 strike call option that expires on 18 October 2025 (about 1 month away). For that, you collect USD 4.05 per share, or USD 405 total.
Here’s what can happen at expiry:
| Scenario | What happens | What you make |
|---|---|---|
| Oracle is below $360 | You keep your shares + the $405 premium | $405 income (~1.3% in a month) |
| Oracle is above $360 | You sell your shares at $360, but also keep the $405 | Total sale value: $364.05 per share → gain of ~20.7% |
Your break-even is around USD 297.60 (current price minus premium), meaning the stock could fall slightly and you'd still break even.
Why now?
The surge in Oracle’s stock was driven by stronger-than-expected cloud bookings and AI-related deals. The options market is still pricing in higher than usual volatility, meaning you get paid more for selling options.
This is why it’s an ideal moment for a conservative income strategy like a covered call.
Risks and things to consider
Covered calls are lower risk than many options strategies, but there are still important things to keep in mind:
- You cap your upside: if the stock soars above USD 360, you won’t benefit beyond that price.
- You may be forced to sell your shares if the stock rises above the strike price.
- Early sale risk near dividend: Oracle’s next dividend is expected around 9 October. If your call option is “in the money” by then, it may be exercised early so the buyer can collect the dividend instead of you.
- No guaranteed income: if the stock drops sharply, your premium only offers a small buffer.
For more active investors: a low-capital version
If you don’t yet own Oracle shares but still want to benefit from this kind of strategy, there’s a more advanced version called a Poor Man’s Covered Call (PMCC).
In this approach:
- You buy a long-term call option deep in the money (e.g., Jan 2026 $250 strike),
- Then sell the short-term call (e.g., Oct 2025 $360 strike) against it.
This lowers the capital required, but it involves more complexity, margin requirements, and risk of early assignment. It’s not recommended for beginners, but can be a useful alternative once you're more familiar with options.
Bottom line
Oracle’s recent post-earnings surge and continued news flow have pushed up options premiums. For investors already holding Oracle shares, this may be a timely moment to consider a covered call to generate additional income or define an exit level.
If the stock stays flat or drifts lower, you keep your shares and the income. If it rises, you still benefit up to the strike price.
It’s a conservative, time-tested strategy—and when market volatility is high like now, the potential income is even more attractive.
| More from the author |
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This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options..
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