Oracle shares soared by 42% today due to an unexpected forecast predicting $144 billion in cloud infrastructure revenue. This spike increased Oracle founder Larry Ellison’s net worth by about $100 billion, bringing it to around $400 billion and putting him ahead of Elon Musk in wealth rankings. The surge also boosted Oracle’s market cap by over $250 billion. Despite personal challenges like four divorces, Ellison’s financial success keeps growing. Today’s 42% jump in Oracle is a wake-up call. We just saw a trillion-dollar company trade with meme stock-like volatility, which changes how we should view risk in large tech firms. This event shows our old ideas about large-cap stability are outdated. As a result, the market might be mispricing options across the tech sector. Even though the VIX remains calm at around 17, the CBOE Skew Index, which assesses demand for tail-risk protection, just rose above 150 for the first time in 2025. This suggests that implied volatility for giants like Microsoft and Amazon may be too low, especially before major announcements. A similar situation unfolded in 2023 and 2024 with NVIDIA’s rapid growth driven by AI expectations. Back then, traders who purchased far out-of-the-money call options saw big rewards as the market consistently underestimated the potential. Today’s Oracle move seems to follow that pattern, but accelerated. In the coming weeks, a smart strategy is to buy volatility in other cloud and enterprise software companies. Setting up long straddles or strangles on competitors can help us profit from significant price swings, as Oracle has shown is possible. Data from the options market indicates that the cost of 90-day options on the XLK technology ETF rose only 8% today, indicating the market hasn’t fully accounted for this new potential for big moves. However, we also need to keep in mind that such explosive rallies can signal excessive market enthusiasm. The last time one company’s announcement sparked such excitement across a sector was Cisco in late 1999, just before the dot-com bubble burst. Therefore, adding some inexpensive out-of-the-money puts on the Nasdaq 100 as a hedge for our portfolio is a wise step.

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