RNA Plummets 9.19%: What's Behind the Sharp Selloff?

Summary
• Avidity Biosciences (RNA) trades at $40.63, down 9.19% from its $45.41 open
• Intraday range spans $39.83 to $45.41 amid heavy turnover of 3.75M shares
• Company announces new AviTag vectors and BirA biotin-protein ligase kits
• Technical indicators signal short-term bearish momentum despite long-term bullish setup

RNA’s dramatic intraday selloff has ignited market speculation, with the stock trading nearly 9% below its opening price. The sharp decline contrasts with the company’s recent product launches and robust AviTag technology adoption. Traders are now parsing technical signals and options activity to gauge whether this move reflects a temporary correction or a deeper shift in sentiment.

Short-Term Bearish Momentum Overshadows Long-Term Optimism
RNA’s intraday collapse aligns with technical indicators pointing to immediate bearish pressure. The stock has pierced its 30-day moving average of $45.46 and is now testing the lower Bollinger Band at $42.17. While the company’s recent product announcements—such as the ATUM AviTag vectors and expanded BirA enzyme kits—highlight long-term growth potential, short-term traders appear to be capitalizing on overbought conditions. The RSI at 46.53 and MACD histogram at -0.88 suggest a reversal in momentum, with profit-taking likely triggered by the stock’s proximity to its 52-week high of $56.

Biotech Sector Suffers Broad Selloff as TMO Drags
The broader biotech sector mirrored RNA’s decline, with sector leader Thermo Fisher Scientific (TMO) down 0.97% intraday. While RNA’s selloff is more pronounced, the sector-wide weakness suggests systemic factors—such as macroeconomic concerns or regulatory uncertainty—may be amplifying the move. RNA’s 9.19% drop, however, outpaces the sector’s average, indicating specific catalysts tied to the stock’s technical profile rather than a sector-wide event.

Options and ETF Plays for Navigating RNA’s Volatility
• 30-day MA: $45.46 (below current price)
• 200-day MA: $33.65 (far below)
• RSI: 46.53 (neutral to bearish)
• MACD: 1.16 (bearish divergence)
• Bollinger Bands: $50.44 (upper), $42.17 (lower)

RNA’s technicals suggest a short-term bearish bias but a long-term bullish setup. Key support levels at $42.17 and $30.39 (200-day range) could dictate near-term direction. The options chain reveals aggressive positioning: the RNA20251017P42 put and RNA20251017C45 call stand out for their high leverage and liquidity.

RNA20251017P42 (Put):
• Code: RNA20251017P42
• Strike: $42
• Expiry: 2025-10-17
• IV: 73.92% (high)
• LVR: 9.34% (moderate)
• Delta: -0.513 (sensitive to price drops)
• Theta: -0.0235 (slow decay)
• Gamma: 0.0443 (moderate sensitivity)
• Turnover: 8,440 (liquid)
• Payoff at 5% downside: $1.57 (max(0, 38.59 - 42) = 0).
• This put offers downside protection with high gamma to amplify gains if RNA breaks below $42.

RNA20251017C45 (Call):
• Code: RNA20251017C45
• Strike: $45
• Expiry: 2025-10-17
• IV: 87.77% (very high)
• LVR: 15.29% (aggressive)
• Delta: 0.401 (moderate sensitivity)
• Theta: -0.0794 (rapid decay)
• Gamma: 0.0361 (moderate)
• Turnover: 21,915 (highly liquid)
• Payoff at 5% downside: $0 (max(0, 38.59 - 45) = 0).
• This call is ideal for aggressive bulls expecting a rebound above $45, leveraging high implied volatility.

Aggressive short-sellers may consider RNA20251017P42 if RNA breaks below $42, while bulls should target a rebound above $45. Watch for a breakdown below $42.17 to confirm bearish momentum.

Backtest Avidity Biosciences Stock Performance
The strategy has been back-tested successfully.Key highlights • Total return: 143.2 % (2022-01-03 → 2025-09-15) • Annualised return: 54.4 % • Sharpe ratio: 0.68 • Maximum draw-down: -81 % (extremely high, signalling large interim risk) Interpretation Buying RNA the day after a −9 % (or worse) daily drop has, over the past three-and-a-half years, delivered an attractive headline return. However, the path to that return was very volatile, with an 81 % peak-to-trough loss at one point. This indicates: 1. The edge comes from a handful of very large rebounds; missing them would severely hurt performance. 2. Adding risk controls (stop-loss / take-profit / maximum holding days) could materially improve the risk-adjusted profile. If you’d like, we can iterate on those parameters next. You can explore the full result interactively below.Feel free to dive into the chart and statistics. Let me know if you’d like to refine the entry rule, add exits (e.g., 5-day holding period) or layer on risk controls.

Act Now: Position for RNA’s Next Move
RNA’s sharp intraday selloff reflects a technical-driven bearish reversal, but its long-term fundamentals remain intact. Traders should monitor the $42.17 support level and $45.46 30-day MA for directional clues. The sector leader Thermo Fisher (TMO) down -0.97% suggests broader biotech weakness, but RNA’s move is more pronounced. Immediate action: short-sellers target RNA20251017P42 if $42 breaks, while bulls watch for a rebound above $45.46. Watch for a breakdown below $42.17 to confirm bearish momentum.