Vera 3.0 · Earnings Watch

Decisions, Decisions: What Earnings Play Should I Do? (If Any)

Oracle or Adobe? The better earnings setup may still be no trade at all.

Oracle and Adobe both report Thursday after the close, and the question is whether either offers an earnings trade worth taking. Adobe appears steadier, but Oracle has the more interesting story. Unfortunately, more interesting does not mean safer.

Oracle has become one of the clearest publicly traded ways to participate in OpenAI's enormous demand for computing power. OpenAI reportedly agreed to purchase approximately $300 billion of computing capacity from Oracle over five years. That could fuel years of cloud growth, but Oracle must spend heavily on chips, data centers and power before much of that revenue arrives. Investors will be looking for evidence that Oracle's enormous backlog is becoming revenue fast enough to justify all that spending.

Adobe faces a different challenge. Its finances are more predictable, but investors worry that generative AI could weaken Creative Cloud. Adobe needs to show that its AI products are attracting customers, supporting subscriptions and producing meaningful revenue. Even an earnings beat may not be enough if guidance disappoints.

What the Market Is Expecting

The stocks are also coming into earnings with very different setups. Oracle traded between approximately $158 and $171 before finishing near $163, while Adobe fell about 3.5%, dropping from around $263 to a low of $254.25 before settling near $257.

For a naked put, however, predicting the earnings reaction is not the goal. The more important question is where the stock would still be worth owning if the reaction is bad. Premium matters, but basis matters more.

How Much Room Do the Strikes Provide?

The November strikes provide about $5 more room than October for both stocks. They also leave more time for the trade to recover if the initial earnings reaction is unfavorable. There is no requirement to hold until November — a favorable move or the post-earnings volatility crush could provide an earlier exit.

Of the four possibilities, the ORCL November $135 put is the most interesting. At around a $6 premium, the effective basis would be approximately $129. That is a 4.4% credit relative to the strike, with a basis well below the market's expected post-earnings downside.

That premium is attractive, but it deserves respect. Earnings premium is high because earnings risk is high. This is where the Vera rules come in: good stock, good strike, good pay. A large premium cannot make up for a bad strike, and the trade only makes sense if the stock is worth owning at the effective basis.

Adobe remains the steadier alternative. Its November $225 strike offers a similar cushion, but Oracle has the edge because of the additional strike room, potentially attractive premium and the changing AI growth story.

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Market & Technology

Meta's Muse: Helpful Assistant or Privacy Nightmare?

Meta's newest AI does not just answer questions. It can send emails, book appointments, fill out forms, plan trips, compare products and make payments. That sounds wonderfully convenient — until you remember who is asking for access to your personal life. The new assistant is called Muse, and unlike a traditional chatbot, it is designed to complete jobs instead of simply explaining how to do them. Connect it to your email, calendar and other apps, give it an assignment, and Muse can work through the steps in the background. Instead of telling you where to find the cheapest flight, it could compare the choices, organize the itinerary and make the reservation.

Muse is initially available in the United States through its own app and WhatsApp, with Ray-Ban smart-glasses support planned later. There is a free version, along with $20 and $100 monthly plans. That is the part Wall Street should be watching. Meta generated $60.8 billion in its latest quarter, with approximately 98% coming from advertising, while it expects to spend between $130 billion and $145 billion this year, much of it on AI infrastructure.

Meta is also considering taking a percentage of purchases completed through Muse. If the agent can recommend an item and complete the sale, Meta moves from selling the billboard to taking a cut at the cash register. But an AI agent that can reach emails, financial services, home devices and private accounts can make a much bigger mess than a chatbot giving a bad answer. Meta says Muse operates in a protected environment and asks permission before sensitive actions, but trust may be the hardest part.

A Market Tidbit · 1913

Congress Calling. Except It Wasn't.

How Wall Street's original wolf used another man's voice to manipulate the market.

In 1913, J.P. Morgan adviser Lewis Cass Ledyard answered the telephone and heard Congressman A. Mitchell Palmer on the line. “Palmer” began applying pressure over Morgan and U.S. Steel, one of America's most closely watched stocks. A threat from Washington could frighten investors and knock millions from a company's value. There was just one problem: the congressman had never made the call.

The voice belonged to David Lamar, a Wall Street speculator and con man gifted at imitating powerful people. Lamar understood that fear moved stocks, and sometimes one believable voice suggesting trouble was enough. His act unraveled during a congressional investigation into Washington lobbyists. The fake congressman was exposed before the real Congress, and Lamar was convicted of impersonating a federal official with intent to defraud. He received two years in prison.

Lamar had made and lost real fortunes, lived on Fifth Avenue, owned racing horses, and carried a diamond-studded walking stick. Yet when Wall Street's original wolf died in a modest Manhattan hotel in 1934, police reportedly found only $138 in his room. Lamar could imitate a congressman, intimidate Wall Street, and live like a millionaire.

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