Oracle & Broadcom: Witness the IV Collapse—Act Before the “Short-Put Window” Closes
Oracle and Broadcom are arguably the two most closely watched names in the back half of this Q3 earnings season. Yet both sold off after reporting—at a time when the “AI bubble is popping” narrative is getting louder—making sentiment even more fragile. The drawdown in these two megas also contributed indirectly to the broader tech sector's pullback (like Nasdaq Composite Index or Nasdaq 100 Index) from December 11 to 17.
However, last Thursday’s Micron earnings provided a much-needed boost to AI and semis, sparking a rebound across the complex—including Broadcom and Oracle—and helping the group stabilize off the lows. The bounce was even more explosive in CoreWeave and Nebius, two names that trade in a similar “compute capacity” bucket as Oracle.
In a prior note, Steven flagged that the post-selloff rebound in Oracle and Broadcom was worth monitoring. Today’s piece is a follow-up.
Oracle (ORCL)
Oracle’s implied volatility has fallen meaningfully versus late November. IV Percentile has dropped back below 50, though the absolute IV level is still above 50. In other words, selling puts can still make sense—but the window is narrowing. If IV compresses toward ~40 or lower, a short-put approach becomes far less compelling.
For a single-leg short put on Oracle, the strike is best set roughly 25%–35% below spot, with an expiration of 4–6 months. The estimated return profile is roughly 4.3%–9.6%.
The key tail risk in a naked short put is straightforward: if the stock breaks below your strike and keeps falling, you may be assigned and end up holding shares while the position moves against you. One way to mitigate that risk is to push the strike further down, reducing assignment probability.
Beyond the single-leg structure, there’s also a two-leg variation: buy a lower-strike long put beneath the short put strike to cap downside—creating a bull put spread. This is one of the cleaner ways to “lock” the downside and reduce the tail risk inherent in a naked short put.
Broadcom (AVGO)
Broadcom’s options setup is broadly similar to Oracle’s, but Broadcom doesn’t carry the same debt overhang, so the left-tail risk is arguably smaller. As a result, using a single-leg short put as a dip-buying structure is more defensible here.
That said, after the past several sessions of volatility cooling across the market, Broadcom’s IV has compressed sharply. IV Percentile has fallen from around ~70 to 17 !!! Put differently: the window to sell premium is closing even faster. Once IV drifts down into the low-30s (or below), there’s not much to do from a “pure premium selling” standpoint. Investors should treat the current volatility as a last, shrinking opportunity set.
From a structure perspective, there are two versions: no-assignment vs. assignment-intended.
No-assignment (pure premium collection):
– Strike: about 15%–25% below spot
– Tenor: 4–6 months
Assignment-intended (willing to take shares):
– Strike: one level higher, e.g., roughly 10% below spot
– Tenor: 2–3 months.
The idea here is to potentially get assigned after a ~10% pullback over the next 2–3 months—effectively “buying” the stock at a lower level via premium. If the stock doesn’t deliver the expected drawdown within that expiry, you can reassess and rebuild the structure based on the then-prevailing price.
One important nuance: the assignment-intended short put is not as dependent on elevated IV—meaning a lower-IV environment doesn’t automatically rule it out. But if IV compresses into the 30s, the no-assignment / pure income version becomes meaningfully less attractive, and at that point it’s often better to stand aside.
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Rockyturki : this analysis on Oracle and Broadcom is super insightful!
CoconutxKitten : Thanks for the tips – definitely gonna act before that "short-put window" closes!
Alexle0 : After reading this, I feel more confident about trying out some short puts on Oracle and Broadcom.
105906539 : i was not convinced that is this the bottom out or we going to another dip. waiting for consolidation.
111454610AJ : Is it still possible to short sell now?
Slay2dudes : ok
102312701 : good
102312701 : good