卧槽 is a toned-down, homophonic replacement for the obscene 我肏 ('fuck'). Common online and in casual speech but still vulgar; avoid in formal settings. Similar softenings: 我去, 我靠.
memory
Literally 'lying (in the) trough,' but nobody hears it that way. It's purely a phonetic dodge for the real curse word, chosen because 卧 and 我 share the w- sound.
