Bloomin' Brands Plunges 28%: Margin Squeeze and Guidance Cut Trigger Investor Exodus

Summary
• Bloomin' Brands (BLMN) tumbles 28.4% intraday to $6.405, its lowest since June 2024
• 52-week low of $6.09 looms as $6.3 intraday low signals capitulation
• Options chain sees 8.5M shares traded, with 7.5-strike calls/puts dominating

Today’s 28.4% freefall in Bloomin’ Brands marks one of the sharpest declines in its volatile history. The stock’s collapse follows a profit warning, margin compression, and a third-quarter loss forecast. With turnover surging to 8.5M shares and the 52-week low in sight, the market is pricing in a dire outlook for the steakhouse giant.

Margin Pressure and Guidance Cut Spark Sharp Selloff
Bloomin’ Brands’ 28.4% intraday plunge stems from a toxic mix of margin erosion and guidance cuts. The company reported a 12.0% restaurant-level operating margin (down from 14.0% YoY) due to inflation-driven labor and commodity costs. Worse, it slashed full-year EPS guidance to $1.00–$1.10 (from $1.20–$1.40) and projected a Q3 loss, shattering analyst expectations. This news triggered a liquidity cascade as short-sellers and longs alike abandoned the stock.

Restaurant Sector Splits as YUM Gains Amid BLMN's Turmoil
While Bloomin’ Brands implodes, YUM! Brands (YUM), the sector leader, rises 1.78% on optimism around its value menu innovations. The divergence highlights BLMN’s unique struggles: margin compression at Outback Steakhouse and flat same-store sales contrast sharply with peers leveraging price cuts and AI-driven efficiency. The restaurant sector’s mixed performance underscores BLMN’s operational fragility.

Options Playbook: Capitalizing on Volatility with BLMN Calls and Puts
• MACD: -0.026 (bearish divergence), RSI: 44.56 (oversold), 200D MA: $10.59 (above price)
• Bollinger Bands: $8.65–$10.51 (price near lower band), 30D support: $9.38–$9.42

BLMN’s technicals scream short-term bearishness but long-term range-bound trading. Key levels to watch: $6.3 (intraday low), $7.5 (strike cluster), and $10.59 (200D MA). The 7.5-strike options dominate the chain, with high implied volatility (57.58–62.12%) and leverage ratios (4.46–42.27%).

Top Option 1: BLMN20250919C7.5
• Code: BLMN20250919C7.5, Expiry: 2025-09-19, Strike: $7.5, Delta: 0.2228, IV: 57.58%, Gamma: 0.2316, Turnover: 12,186
• Delta: Low sensitivity to price, IV: High volatility premium, Gamma: High sensitivity to price swings
• This call thrives in a sideways-to-bullish scenario. With 42.27% leverage and 57.58% IV, it’s ideal for a bounce above $7.5. Projected 5% downside payoff: $0.00 (call expires worthless).

Top Option 2: BLMN20251017P7.5
• Code: BLMN20251017P7.5, Expiry: 2025-10-17, Strike: $7.5, Delta: -0.7191, IV: 53.54%, Gamma: 0.2137, Turnover: 26,069
• Delta: High sensitivity to downside, IV: Moderate volatility, Gamma: High sensitivity to price swings
• This put is a bearish bet with 4.46% leverage and 53.54% IV. Projected 5% downside payoff: $0.375 (K - ST = $7.5 - $6.08 = $1.42).

Trading Hook: Aggressive bulls may buy BLMN20250919C7.5 into a bounce above $7.5. Bears should short BLMN20251017P7.5 if $6.3 breaks.

Backtest Bloomin'Brands Stock Performance
The backtest of BLMN's performance after an intraday plunge of at least -28% shows favorable short-to-medium-term gains. The 3-Day win rate is 51.11%, the 10-Day win rate is 52.66%, and the 30-Day win rate is 54.03%, indicating a higher probability of positive returns in the immediate aftermath of such a significant downturn. The maximum return during the backtest period was 1.22%, which occurred on day 41, suggesting that while the stock may not always bounce back immediately, it has a good chance of recovering within a month.

Urgent Action Needed: BLMN at Crossroads as Volatility Peaks
BLMN’s 28.4% collapse is a liquidity event, not a value opportunity. The stock’s 52-week low of $6.09 is within reach, and the 7.5-strike options will dominate near-term activity. While YUM! Brands (YUM) gains 1.78%, BLMN’s operational challenges—flat same-store sales and margin compression—demand caution. Investors should watch the $6.3 support and $7.5 strike cluster. For now, short-side plays via the 7.5 put or cash-secured puts are preferable to longs.