Intuit Plummets 6.4%: What's Behind the Sudden Drop in the Tax Software Giant?

Summary
• Intuit (INTU) trades at $566.3, down 6.44% from its previous close of $605.28
• Intraday range spans $556.66 to $592.66, signaling sharp volatility
• Sector leader Microsoft (MSFT) also declines 2.63%, hinting at broader tech pressure
• RSI at 21.18 and MACD at -7.86 confirm bearish momentum
Intuit’s dramatic intraday selloff has ignited market speculation, with the stock trading nearly 6.5% below its opening price. The move coincides with a broader tech sector pullback, as Microsoft’s 2.6% decline underscores sector-wide fragility. With technical indicators flashing red and options volatility spiking, traders are scrambling to decipher whether this is a short-term correction or a deeper shift in investor sentiment toward software stocks.

Bearish Technicals and Volatility Spikes Drive Sharp Correction
Intuit’s 6.44% intraday drop is primarily driven by deteriorating technical indicators and a surge in put option activity. The stock has pierced key support levels, including the 30-day moving average of $656.90 and the 200-day average of $683.50, triggering algorithmic selling. The RSI of 21.18—a level typically associated with oversold conditions—suggests exhausted buyers, while the MACD histogram of -5.04 indicates accelerating bearish momentum. Options data reveals aggressive short-term bearish positioning, with the INTU20260123C570 call option experiencing a 13.53% price drop despite high leverage (69.33%) and moderate delta (0.49), reflecting a shift in market sentiment from optimism to caution.

Software Sector Under Pressure as Microsoft Drags Tech Indices Lower
The Application Software sector is broadly underperforming, with Microsoft’s 2.63% decline amplifying sector-wide jitters. Intuit’s 6.44% drop outpaces Microsoft’s selloff, suggesting sector-specific concerns. While Microsoft’s decline reflects broader macroeconomic anxieties, Intuit’s sharper move points to product-specific worries—particularly as its 52-week high of $813.70 remains a distant memory. The sector’s 52-week low of $532.65 is now within striking distance for Intuit, raising questions about the sustainability of its premium valuation (88.33x dynamic P/E).

Bearish Playbook: Leveraging Volatility with High-Gamma Options
• 200-day average: $683.50 (well below current price)
• RSI: 21.18 (oversold territory)
• MACD: -7.86 (bearish divergence)
• Bollinger Bands: $618.27–$695.14 (current price near lower band)
• Key support/resistance: 30-day support at $646.62, 200-day resistance at $659.93
Intuit’s technical profile screams short-term bearishness, with the stock trading near its 52-week low and key moving averages acting as overhead resistance. The most compelling options for bearish exposure are the INTU20260123C570 and INTU20260123C575 calls, which offer high leverage (69.33% and 64.61%) and moderate deltas (0.49 and 0.428) to capitalize on continued downward drift. Both contracts exhibit strong gamma (0.018378 and 0.013653) and theta (-1.3574 and -1.3655), making them ideal for short-term volatility plays.
• INTU20260123C570 (Call, $570 strike, Jan 23):
- Implied Volatility: 23.06% (moderate)
- Lverage Ratio: 69.33% (high)
- Delta: 0.49 (moderate sensitivity)
- Theta: -1.3574 (rapid time decay)
- Gamma: 0.018378 (high sensitivity to price swings)
- Turnover: 132,133 (liquid)
- Payoff at 5% downside (537.49): $32.59 per contract
- This option benefits from high leverage and gamma, making it ideal for a 5% drop scenario.
• INTU20260123C575 (Call, $575 strike, Jan 23):
- Implied Volatility: 30.55% (elevated)
- Lverage Ratio: 64.61% (high)
- Delta: 0.428 (moderate sensitivity)
- Theta: -1.3655 (rapid time decay)
- Gamma: 0.013653 (moderate sensitivity)
- Turnover: 94,083 (liquid)
- Payoff at 5% downside (537.49): $37.51 per contract
- The higher strike price offers amplified returns in a bearish scenario, though with slightly lower gamma.
Aggressive bears should consider INTU20260123C570 into a breakdown below $570, while those seeking higher leverage might target INTU20260123C575 if the stock tests the $556.66 intraday low.

Backtest Intuit Stock Performance
The backtest of Intel's (INTU) performance after a -6% intraday plunge from 2022 to the present shows mixed short-term results but a positive long-term outlook. The 3-Day win rate is 54.39%, the 10-Day win rate is 51.46%, and the 30-Day win rate is 57.32%, indicating a higher probability of positive returns in the short term. However, the maximum return during the backtest period was only 3.23%, suggesting that while Intel has the potential for recovery, the returns may be modest.

Act Now: Position for a Potential 10% Drop in Intuit
The confluence of bearish technicals, elevated put-call ratios, and Microsoft’s sector leadership in the selloff suggests Intuit’s decline could extend beyond its current 6.44% drop. Key levels to watch include the 200-day average at $683.50 and the 52-week low of $532.65. With Microsoft’s 2.63% decline signaling broader tech fragility, investors should prioritize short-term bearish options like INTU20260123C570 and INTU20260123C575 for leveraged exposure. A breakdown below $570 would validate the bear case, while a rebound above $592.66 could signal a temporary pause. Watch for $570 support and consider shorting volatility if the stock closes below $560.