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Oracle Corporation (NYSE:ORCL) dropped dramatically after releasing disappointing earnings last week and, after a short-lived dead-cat bounce on Monday, we think the stock will continue moving lower.

All of the hope and optimism that had been driving ORCL higher during the past year revolved around hopes the company would be able to grow its software as a service (SaaS) revenue as it competed with companies like salesforce.com, inc. (NYSE:CRM). Unfortunately, Oracle’s latest earnings announcement and guidance show current and anticipated SaaS revenue and earnings growth is slowing.

Downgrading guidance is never a good thing for a company’s equity value, but it’s especially worrisome when it comes at a time when investors market-wide are already jittery and are looking to reduce risk and decrease the price multiples they are paying for equities.

After breaking through support at $47 last week and successfully re-testing that level on Tuesday to see if former support would hold up as resistance, we are looking for the stock to drop back down to $45, if not lower, in the coming week or two.

‘Buy to open’ the ORCL May 45 Put (ORCL180518P00045000) for a maximum price of $1.25.

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