Liquidia's 10.4% Plunge: What's Behind the Sudden Downturn?

Summary
• Liquidia (LQDA) plunges 10.4% to $29.20, its lowest since 2023
• Competitor United Therapeutics' new treprostinil product sparks sell-off
• Analysts remain split: 2 'Strong Buy' vs. 2 'Sell' ratings
• Insider selling of $8.1M in 90 days adds pressure

Liquidia’s stock has imploded intraday, trading 10.4% below its opening price of $33.87. The selloff follows United Therapeutics’ announcement of a new treprostinil-based therapy, directly competing with Liquidia’s LIQ861. With insider selling and bearish technicals amplifying the move, traders are scrambling to assess whether this is a short-term correction or a deeper structural shift.

Competitor's Innovation and Insider Selling Trigger Sharp Selloff
The 10.4% drop in LQDA is primarily attributed to United Therapeutics’ announcement of its new treprostinil formulation, which directly targets the same pulmonary arterial hypertension (PAH) market as Liquidia’s LIQ861. This news triggered immediate profit-taking and position unwinding in LQDA. Compounding the pressure, insider selling of 216,820 shares worth $8.1M in the last 90 days—despite insiders retaining 30.1% ownership—signaled internal skepticism. The stock’s collapse below its 200-day moving average ($25.74) and bearish engulfing candlestick pattern further accelerated the selloff as algorithmic traders and short-sellers capitalized on the technical breakdown.

Bearish Options and ETFs to Capitalize on LQDA’s Technical Weakness
• 200-day MA: $25.74 (below current price)
• RSI: 17.51 (oversold)
• MACD: -1.29 (bearish)
• Bollinger Band Lower: $31.12 (critical support)

Liquidia’s technicals paint a dire picture: RSI at 17.51 signals oversold conditions, while MACD at -1.29 confirms bearish momentum. The stock is trading near its lower Bollinger Band ($31.12), suggesting exhaustion. For traders, the LQDA20260306P29.5 put option (strike $29.5, IV 181.84%, delta -0.386, gamma 0.0413) offers high leverage (10.25%) and strong gamma sensitivity to price declines. Its implied volatility (181.84%) and moderate delta (-0.386) make it ideal for a 5% downside scenario. The LQDA20260306P28.5 put (IV 141.60%, delta -0.368, gamma 0.0537) also stands out with high gamma (0.0537) and reasonable liquidity (turnover 421). Both options are positioned to benefit if LQDA breaks below $29.20. For sector exposure, consider PILL (leveraged pharma ETF) to hedge against broader industry risks.

Backtest Liquidia Stock Performance
The backtest of LQDA's performance after an intraday plunge of -10% from 2022 to the present shows favorable results. The ETF has experienced a maximum return of 17.06% over 30 days, with a 30-day win rate of 60.98%, indicating that the majority of days following the -10% plunge resulted in positive returns.

Act Now: Key Levels and Options to Watch in LQDA’s Critical Downturn
Liquidia’s 10.4% drop reflects both competitive pressures and internal skepticism, with technical indicators confirming bearish momentum. Traders should monitor the $25.74 200-day MA as a critical support level and the $31.12 Bollinger Band for potential rebounds. The LQDA20260306P29.5 and LQDA20260306P28.5 options offer amplified exposure to further declines, while PILL provides leveraged sector hedging. With AMGN (Amgen) up 0.16% as a sector leader, investors must balance short-term bearish bets with broader market dynamics. Immediate action: Target the $29.5 put if LQDA breaks below $29.20, and consider PILL for sector alignment.