Otis Worldwide Plunges 11% as China's Property Market Sours: Is the Bottom in Sight?

Summary
• OTIS shares fell 11% to $89.88, marking a 11% intraday drop amid a $14.5B–$14.6B revenue forecast cut.
• China's property market slump and U.S. import tariffs dented Q2 new equipment sales by 10%, dragging net sales to $3.6B.
• Service segment growth of 6% offset declines, but adjusted EPS of $1.05 missed $1.03 estimates.
• The stock traded between $86.00 and $91.88, reflecting 14.5M shares changed hands in a 1.44% turnover.
Today’s 11% collapse in OTIS underscores a perfect storm of macroeconomic headwinds and sector-specific challenges. The company’s China exposure—where property market stagnation and fresh tariffs collide—has magnified its vulnerability. With service growth masking structural fragility in new equipment demand, investors are now racing to assess whether this selloff is a buying opportunity or a warning shot.

China's Property Market Weakness Sparks Revenue Forecast Cut
Otis’s 11% intraday plunge stems from a dual blow: China’s property market slump and U.S. import tariffs. The company’s Q2 new equipment sales fell 10% to $1.28B, with China’s 20% decline—driven by frozen real estate activity and 9% tariffs—offsetting EMEA gains. Management’s revised $14.5B–$14.6B revenue outlook, down from $14.6B–$14.8B, signals sustained demand weakness. While service sales grew 6%, the segment’s 24.9% margin expansion couldn’t offset new equipment’s 5.3% margin contraction. The 11% drop reflects a re-rating of earnings visibility amid China’s structural risks.

Industrial Machinery Sector Volatile as GM Slumps, Stellantis Discontinues Hydrogen Projects
The industrial machinery sector is under pressure, with GM reporting a 35% Q2 profit drop and Stellantis axing hydrogen projects. Otis’s 11% decline aligns with broader sector jitters. While GM’s slump reflects tariff impacts, Stellantis’s hydrogen exit highlights technology pivots. Otis’s China exposure, however, isolates it from peers, as property market tailwinds and trade tensions uniquely amplify its risk profile. The sector’s mixed performance—Dover up 0.34% versus OTIS’s 11% drop—underscores divergent macro sensitivities.

Bearish Options Play and Technical Levels to Watch
• MACD: 0.845 (Signal Line: 0.865, Histogram: -0.02) suggests bearish divergence.
• RSI: 52.62 (neutral) indicates lack of momentum.
• Bollinger Bands: 86.00–91.88 (tight range) reflects consolidation.
• 200D MA: $98.29 (OTIS at $89.88, below trend).
• Key Levels: Support at $86.00 (intraday low), resistance at $91.88 (intraday high).

Two options stand out for bearish exposure:
• OTIS20250815P87.5 (Put, $87.50 strike, Aug 15 expiry):
- IV: 21.55% (moderate volatility)
- Leverage Ratio: 90.62% (high return potential)
- Delta: -0.30 (moderate sensitivity)
- Theta: -0.002766 (slow decay)
- Gamma: 0.0705 (responsive to price swings)
- Turnover: $6,273 (liquid)
- Payoff at 5% Downside (ST=85.39): $2.11 per contract. This option balances leverage and liquidity, ideal for a short-term bearish bet.
• OTIS20250815C90 (Call, $90 strike, Aug 15 expiry):
- IV: 18.66% (moderate)
- Leverage Ratio: 54.37%
- Delta: 0.497 (high sensitivity)
- Theta: -0.084260 (rapid decay)
- Gamma: 0.0928 (aggressive gamma)
- Turnover: $26,830 (high liquidity)
- Payoff at 5% Downside: $0.00 (out-of-money). While a call option, its high gamma makes it a speculative play if OTIS rebounds above $90.
For a bearish stance, OTIS20250815P87.5 offers optimal leverage and liquidity. Aggressive bulls may chase a $90 retest, but the $86.00 support break is critical for further downside.

Backtest Otis Worldwide Stock Performance
The performance of OTIS after an intraday plunge of -11% was generally positive, with win rates and returns indicating a favorable recovery period. Here's a detailed analysis based on the backtest data:1. Frequency and Win Rates: The event occurred 546 times, with a 3-day win rate of 53.48%, a 10-day win rate of 55.68%, and a 30-day win rate of 56.41%. This suggests that OTIS had a higher probability of a positive return in the short to medium term following the plunge.2. Returns: The average 3-day return was 0.22%, the 10-day return was 0.52%, and the 30-day return was 1.53%. This indicates that while the immediate aftermath of the plunge had modest returns, there was a gradual improvement in performance over the following weeks.3. Maximum Return: The maximum return during the backtest period was 3.09%, which occurred on day 59. This highlights that while the recovery was generally positive, there were periods of higher performance even beyond the initial 30 days.In conclusion, OTIS demonstrated resilience following a significant intraday plunge, with a higher likelihood of positive returns in the short to medium term. Investors might consider this information when assessing the stock's potential for recovery from similar events in the future.

Watch for $86 Support Breakdown as China's Property Market Pressures Linger
Otis’s 11% collapse reflects a re-rating of China’s structural risks, with the $86.00 intraday low now a key support level. The 200D MA at $98.29 remains a distant hurdle, while the 52W low of $86.00 looms. A breakdown below $86.00 could accelerate the selloff, testing the 2025 low. Conversely, a close above $91.88 would signal short-covering. The sector’s mixed signals—Dover’s 0.34% gain versus GM’s slump—add uncertainty. Investors should monitor China’s property market data and tariff developments. For now, OTIS20250815P87.5 offers a leveraged bearish play if $86.00 breaks.