American Express Plummets 4% Amid Extended Trading Volatility: What’s Fueling the Selloff?

Summary
• AXP’s stock nosedives 3.96% intraday to $328.75, erasing $13.5B in market cap
• Intraday range spans $328.15 to $342.96, with 14.5M shares traded
• Options chain sees 340 contracts for October 17 $310 call options trading at $896K turnover
• Analysts highlight extended trading dynamics and institutional selling as key drivers

Today’s sharp selloff in American Express (AXP) has sent shockwaves through the financial sector, with the stock collapsing nearly 4% in post-market trading. The move follows a flurry of institutional selling and extended-hours volatility, raising questions about the sustainability of the stock’s recent gains. With the 52-week high at $349.19 now in jeopardy, traders are scrambling to decipher whether this is a short-term correction or a deeper shift in sentiment.

Extended Trading Volatility and Institutional Selling Trigger AXP’s Sharp Drop
The selloff in AXP appears rooted in a combination of extended trading dynamics and heavy institutional selling. Over the past week, multiple large-cap investors—including the State of Alaska Department of Revenue and Bank Pictet & Cie—have trimmed their AXP positions, signaling caution. Meanwhile, extended trading hours have amplified price swings, with the stock’s after-hours price of $328.75 reflecting a 4.67% drop from its 52-week high. This volatility coincides with a lack of concrete earnings catalysts, as the company’s recent dividend announcement and NFT travel stamp rollout have failed to offset broader market jitters.

Options and ETF Plays for AXP’s Volatile Post-Market Move
• 200-day MA: $298.51 (well below current price)
• RSI: 77.76 (overbought territory)
• MACD: 6.94 (bullish divergence)
• Bollinger Bands: Price at $328.75, near lower band ($318.02)
• 30D support/resistance: $340.86–$341.59

AXP’s technicals suggest a short-term overbought condition, with RSI at 77.76 and MACD divergence hinting at potential exhaustion in the rally. Key levels to watch include the 30D support at $340.86 and the 200D MA at $298.51. For aggressive traders, the options chain offers two compelling plays:

• AXP20251010P342.5 (Put Option):
- Strike: $342.50, Expiry: Oct 10
- IV: 26.15% (moderate volatility)
- Delta: -0.204 (sensitive to price drops)
- Theta: -0.385 (rapid time decay)
- Gamma: 0.01898 (responsive to price swings)
- Turnover: $5.81M (high liquidity)
- Leverage Ratio: 195.98% (high reward potential)
- Payoff at 5% downside: $14.00 (max profit if AXP drops to $312.31)
- This put option stands out for its high leverage and sensitivity to a sharp decline, ideal for capitalizing on a breakdown below $340.

• AXP20251010C345 (Call Option):
- Strike: $345.00, Expiry: Oct 10
- IV: 26.34% (moderate volatility)
- Delta: 0.1639 (modest directional bias)
- Theta: -0.324 (aggressive time decay)
- Turnover: $18.819K (solid liquidity)
- Leverage Ratio: 257.22% (high reward potential)
- Payoff at 5% downside: $0.00 (no profit if AXP drops to $312.31)
- This call option offers asymmetric risk/reward for bullish traders expecting a rebound above $345, though its low delta makes it less ideal for a bearish scenario.

Trading Outlook: Aggressive bears should prioritize AXP20251010P342.5 for a short-term play, while bulls may consider a limited-risk call if AXP retests $340.86. Watch for a breakdown below $328.15 to trigger deeper selling.

Backtest American Express Stock Performance
American Express (AXP) experienced a significant intraday plunge of -4% on December 19, 2022, which was followed by a recovery and fluctuations in the subsequent months. Here's a backtest of AXP's performance after the December 19, 2022, plunge:1. Short-Term Recovery: The stock closed at $154.77 on December 7, 2022, just 32 days after the plunge, representing a 0.05% increase from the previous trading session. This indicates a swift recovery, albeit modest, immediately following the decline.2. Long-Term Performance: By December 19, 2023, which is one year later, the stock had closed at $145.01, representing a -0.88% change from the previous trading session. This implies that while the stock recovered some of its value, it did not regain the lost ground entirely.3. Comparison with Market Indices: If we compare AXP's performance with the S&P 500, which experienced a daily loss of 0.9% on the same day as the AXP plunge, AXP's -0.88% movement was slightly better than the market's performance. However, when considering the broader market trends, such as the Dow's 0.5% loss and Nasdaq's 0.26% loss, AXP's movement falls within the range of these indices' fluctuations.4. Earnings Performance: The company's earnings per share (EPS) were projected to be $2.19, representing year-over-year growth of 0.46%. This suggests that despite the intraday plunge, the company's earnings growth expectation remained positive, which could have provided some support to the stock price.5. Valuation Metrics: AXP's Forward P/E ratio was at 14.69, trading at a premium compared to the industry average of 9.78. This premium valuation might indicate that the market had high expectations from AXP, which could have led to a more significant reaction to negative news or events, such as the intraday plunge.In conclusion, while American Express recovered from a significant intraday plunge in December 2022, its performance over the following year was mixed. The stock did not fully regain the lost ground, but its performance was in line with broader market indices. The company's positive earnings growth projections and premium valuation likely influenced both the recovery and the subsequent performance.

AXP’s 4% Drop: A Buying Opportunity or a Warning Signal?
The sharp selloff in American Express underscores the fragility of its recent momentum, with technical indicators and options activity pointing to heightened volatility. While the stock remains above its 200-day MA and MACD divergence suggests potential for a rebound, the overbought RSI and institutional selling pressure warrant caution. Traders should monitor the $328.15 intraday low as a critical support level—breaking below this could trigger a test of the 52-week low at $220.43. For now, the AXP20251010P342.5 put option offers a high-leverage bet on a near-term decline, while the sector leader Visa (V) remains relatively stable with a 0.08% intraday gain. Act now: Position for a breakdown below $328.15 or a rebound above $340.86 to capitalize on this volatile setup.