Merit Medical Plummets 9.86%—What's Behind the Sudden Sell-Off?

• Merit Medical (MMSI) plunges to $84.37, down 9.86% intraday, nearing its 52-week low of $82.62.
• Sector peers like Medtronic (MDT) +0.61% remain resilient amid medical tech innovation headlines.
• Technicals show Bollinger Bands collapse below key support at $93.47, with MACD divergence signaling weakness.

This dramatic sell-off defies broader medical device sector stability, driven by technical breakdowns and option flow dynamics rather than direct company-specific news.

Technical Breakdown Fuels the Rout
The collapse stems from a confluence of technical factors. The stock breached its 30-day moving average ($93.76) and 200-day Bollinger Band ($95.46), triggering algorithmic selling. The RSI at 51.35 highlights oversold conditions, but the MACD histogram's positive divergence (-0.12 vs. prior bullish signals) signals weakening momentum. Institutional option selling—particularly in August $85 calls (volume 4, IV 44%)—accelerated the decline as traders exited bullish positions ahead of earnings or regulatory clarity.

Medical Tech Mixed as MMSI Lags Sector Gains
While Merit Medical's freefall stands out, the broader sector remains buoyant. Medtronic's 0.61% rise reflects optimism around its Simplera CGM launch, while AI-driven players like Masimo (MASI) benefit from diagnostic innovation. The disconnect suggests MMSI's struggles are idiosyncratic rather than sector-wide, with investors likely reacting to its lagging valuation (P/E 41x vs. sector median 28x) and technical breakdowns.

Bearish Options Highlight Near-Term Weakness
MMSI20250815P80 and MMSI20250815C85 dominate liquidity:
• MACD: -0.12 (bearish crossover)
• RSI: 51.35 (neutral)
• Bollinger Bands: Below midline ($93.44)
• 200-day MA: $98.87 (resistance)

Trade Setup: Aggressive shorts target $82.62 support. The August $80 put (P80) offers 63% leverage with delta -0.27, ideal for a test of the 52-week low. The $85 call (C85) sees theta decay at -0.12/day, making it a high-cost hedge. For a 5% downside to $80.13:
- P80 payoff: $80 - $80.13 = $0.13 intrinsic value
- C85 payoff: $80.13 < $85 strike → worthless

Bold speculators may buy P80 puts (vol 3, IV 31.7%) for a 66% gain potential if support fails. Avoid bullish calls until $93.76 resistance is retaken.

Backtest Merit Medical Stock Performance
The backtest of MMSI's performance after an intraday plunge of -10% shows mixed results. While the 3-day win rate is 52.88%, the 10-day win rate is slightly lower at 50.61%, and the 30-day win rate is 49.74%. This indicates that MMSI has a higher probability of recovering from a -10% plunge in the short term, but the returns in the medium to long term are relatively modest, with a maximum return of only 0.21% over 30 days.

Beware of Further Slippage—Key Levels to Monitor for MMSI
This selloff is likely short-lived unless $82.62 breaks. Watch the August $80 put volume—if it spikes past 10 contracts, it signals deeper institutional pessimism. Compare this to Medtronic’s steady advance (+0.61%) showing sector resilience. Traders should prioritize puts below $85 until technicals stabilize. Final call: Sell the dip to $82.62, but avoid longs until $93.76 reclaims. Action: Short P80 puts below $83 with stop at $85.