Larry Ellison just canceled a plan to sell billions in Oracle stock, but the market is punishing shares anyway as a surprise cost disclosure threatens to overpower what should have been a bullish insider signal.

Oracle's stock is trading at about 23 times its trailing profits, which is right in line with the S&P 500 average. While it may look cheaper these days, it may still not offer investors enough margin of safety to offset the risks associated with its high debt load and exposure to OpenAI.

Oracle (ORCL) earned almost a quarter more operating income last fiscal year. Yet its stock closed around 53% below its peak of a year earlier on September 10, just before its latest results. A gap like that points to one of two things: the market sees trouble the numbers do not show yet,

Oracle's stock is trading at about 23 times its trailing profits, which is right in line with the S&P 500 average. While it may look cheaper these days, it may still not offer investors enough margin of safety to offset the risks associated with its high debt load and exposure to OpenAI.

Rate hike fears, AI oversight talk, and an about-face move by Larry Ellison helped send Oracle lower.

Oracle is scheduled to report earnings after the closing bell Thursday, with traders anticipating a big move from the database and cloud infrastructure giant’s stock.

Options are relatively affordable at the moment too. This is per ORCL's Schaeffer's Volatility Index (SVI) of 49% stands higher than just 11% of all other readings from the past year, implying that near-term option traders are pricing in relatively low volatility expectations.