Textron Plunges 6.03%: Is the Aviation Titan's Rally a Mirage?

Summary
• Earnings beat expectations with $1.55 adjusted EPS, up 0.65% year-over-year
• Shares nosedive to $81.955 (intraday low: $81.73) amid mixed cash flow guidance
• 52-week range compression to 57.70-93.98 signals heightened volatility

The Textron stock plunge defies conventional earnings logic. Despite beating estimates by 7.08% and raising cash flow guidance to $900M-$1B, TXT shares cratered post-earnings. This article dissects the technical carnage and options volatility to uncover whether the selloff reflects short-term panic or structural concerns.

Earnings Optimism Clashes with Cash Flow Realities
Textron's 6.03% post-earnings collapse stems from a dissonance between GAAP results and cash flow guidance. While adjusted EPS rose 0.65% to $1.55, the cash flow revision from $800M to $900M-$1B failed to excite investors. The 52-week range contraction (57.70-93.98) suggests traders are pricing in heightened volatility. With the stock breaching the 200-day MA at 77.53, technical indicators confirm a breakdown in the long-term trend. The 30-day RSI at 73.67 (overbought) and MACD histogram at 0.078 (bullish) indicate a classic topping pattern.

Bearish Playbook: Capitalizing on TXT's Technical Breakdown
• 200-day MA: 77.53 (below) • RSI: 73.67 (overbought) • Bollinger Bands: 78.55-87.83 (breakdown) • MACD: 2.31 (bullish) • 30D Support: 80.21-80.43 • 200D Support: 76.70-77.30

With TXT testing critical support levels, bearish strategies gain traction. The TXT20250815P75 put (strike:75, IV:27.03%, leverage:372.45%, delta:-0.084) offers 372x exposure to a 5% downside. At $81.955, a 5% drop to $77.86 would yield $2.86/share payoff (max profit: $2.86). The TXT20250815P77.5 put (strike:77.5, IV:23.54%, leverage:204.85%, delta:-0.154) provides higher gamma (0.049) for volatility play. Both contracts show theta decay above 0.005, making them suitable for short-term bearish bets. Aggressive traders may consider 1:2 put ratio spreads to hedge downside risk.

Backtest Textron Stock Performance
The backtest of TXT's performance after an intraday plunge of -6% shows favorable short-to-medium-term gains. The 3-Day win rate is 56.33%, the 10-Day win rate is 60.83%, and the 30-Day win rate is 57.19%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return during the backtest period was 5.02%, which occurred on day 59, suggesting that TXT can generate decent gains even after a significant intraday decline.

Critical Juncture: TXT at Crossroads of Cash Flow and Capital Confidence
Textron's technical breakdown below key support levels signals a pivotal moment. The 77.53-78.55 price corridor will be critical for near-term direction. With Boeing (BA) down 0.28% as sector leader, investors should monitor cash flow execution against the $900M guidance. Immediate action: short TXT against the 77.53-78.55 range with stop above 80.21. The 76.70-77.30 200D support will be the next test of conviction. Watch for follow-through volume on any rally above 83.19 (middle Bollinger Band).