Combine oats, water, and milk in a saucepan, then bring to a gentle simmer over medium heat.
In a separate skillet, melt butter and cook diced apples until soft and lightly golden.
Add brown sugar and cinnamon to the apples; stir until coated and caramelized.
Stir the apple mixture into the simmering oats and cook for several more minutes until creamy.
Finally, drizzle caramel sauce over the top, sprinkle nuts if desired, and serve warm.