Applied Materials Plummets 2.8%: What’s Behind the Sudden Selloff?

Summary
• Applied Materials (AMAT) trades at $222.26, down 2.82% intraday, with a 52-week low of $123.74
• Q4 FY2025 revenue of $6.8B fell 3% YoY, while non-GAAP EPS of $2.17 rose 9% YoY
• Options chain sees heavy volume in put options at $215 strike, with 101 contracts traded
• Bollinger Bands show price near lower band at $220.78, signaling oversold conditions

Applied Materials faces a sharp intraday decline amid mixed earnings and bearish technicals. The stock’s 2.8% drop has triggered a surge in put options activity, with traders betting on further downside. Key technical indicators like MACD and RSI suggest a potential reversal, but sector headwinds and earnings guidance could prolong the selloff.

Earnings Disappointment and Guidance Dampen Sentiment
Applied Materials’ Q4 FY2025 results revealed a 3% year-over-year revenue decline to $6.8B, despite record annual revenue of $28.37B. While non-GAAP EPS rose 9% to $2.17, the quarterly GAAP EPS of $2.38 fell short of expectations. The company’s guidance for Q1 FY2026 revenue of $6.85B ±$500M and non-GAAP EPS of $2.18 ±$0.20 signaled cautious optimism, but investors reacted negatively to the lack of aggressive growth projections. Management’s focus on preparing for demand in H2 2026, rather than immediate acceleration, further fueled short-term pessimism.

Semiconductor Equipment Sector Volatile as ASML Slides
The semiconductor equipment sector remains volatile, with ASML Holding (ASML) down 2.1% intraday, reflecting broader industry caution. Applied Materials’ 2.8% drop outperformed the sector’s average decline, but its 52-week high of $242.5 contrasts with the 52-week low of $123.74, highlighting its cyclical nature. While ASML’s leadership in EUV lithography offers long-term growth, AMAT’s exposure to foundry and DRAM markets faces near-term headwinds from inventory adjustments and slowing demand.

Bearish Options and ETFs to Capitalize on AMAT’s Volatility
• 200-day MA: $178.17 (far below current price)
• RSI: 50.74 (neutral)
• MACD: 3.62 (bullish divergence)
• Bollinger Bands: Lower band at $220.78 (support level)

Top Options Contracts:
• AMAT20251128P215 (Put, $215 strike, 2025-11-28):
- IV: 51.08% (moderate)
- Leverage Ratio: 50.62% (high)
- Delta: -0.3247 (moderate bearish exposure)
- Theta: -0.0851 (time decay manageable)
- Gamma: 0.0182 (responsive to price swings)
- Turnover: 16,249 (liquid)
- Payoff (5% downside): $3.86/share (max profit if AMAT drops to $211.14)
- Why: High leverage and liquidity make this put ideal for short-term bearish bets.

• AMAT20251128C227.5 (Call, $227.5 strike, 2025-11-28):
- IV: 43.18% (moderate)
- Leverage Ratio: 47.39% (high)
- Delta: 0.4084 (moderate bullish exposure)
- Theta: -0.5554 (high time decay)
- Gamma: 0.0232 (strong gamma for directional moves)
- Turnover: 47,838 (highly liquid)
- Payoff (5% downside): $0 (call expires worthless, but high gamma offers recovery potential if AMAT rebounds)
- Why: Aggressive bulls may use this call for a rebound trade, leveraging high gamma for rapid price swings.

Action: Short-term bearish traders should prioritize the AMAT20251128P215 put for downside exposure, while bulls may test the AMAT20251128C227.5 call if AMAT breaks above $227.50.

Backtest Applied Materials Stock Performance
Below is the interactive event-study module. It summarizes AMAT’s average price behaviour after every -3 % one-day drop since 2022.Key take-aways (30-day window):• 98 qualifying drops detected. • Median next-day move is essentially flat (-0.02 %), and the win-rate hovers near 50 %. • Cumulative excess return versus holding the stock is modest and not statistically significant at any horizon out to 30 days. • Buying the dip after a -3 % day has not delivered a dependable edge in this sample.Feel free to drill into the module for the full day-by-day breakdown or let me know if you’d like alternative holding windows or risk filters.

Act Now: AMAT at Pivotal Support Level
Applied Materials’ 2.8% drop has brought it to critical support near the Bollinger Band lower bound at $220.78. While technicals hint at a potential rebound, earnings caution and sector volatility suggest further consolidation. Traders should monitor the $215 level for put options and the $227.50 resistance for call opportunities. With ASML down 2.1%, sector-wide caution persists. Act now: Buy the AMAT20251128P215 put for bearish exposure or test the AMAT20251128C227.5 call if AMAT breaks above $227.50.