Archer Aviation Plunges 11%: Is This a Buying Opportunity or a Warning Signal?

Summary
• Archer Aviation (ACHR) slumps 11.1% intraday to $11.81, breaking below its 200-day moving average of $8.07
• 52-week high of $13.92 remains 16% above current price, but Bollinger Bands signal oversold territory at $8.73
• Options chain sees explosive activity: 20 contracts traded with leverage ratios up to 43.89%
Archer Aviation’s 11.1% intraday plunge has triggered a cascade of market reactions, with the stock now trading at $11.81—its lowest level since early 2025. The sharp decline follows a volatile week of 23% gains, raising questions about whether this is a profit-taking selloff or a deeper shift in market sentiment. With a 52-week high of $13.92 still in play and a projected FAA approval timeline intact, traders are now scrutinizing technical levels and options activity for clues to the next move.

Joby's Expansion and Defense Bets Spark Volatile Reaction
The selloff was catalyzed by a mix of sector dynamics and speculative overreach. Despite Joby Aviation’s recent production capacity doubling—a bullish sign for the eVTOL industry—Archer’s shares collapsed as investors reassessed valuations. The stock’s 36% rally in 2025 has pushed its 2027 revenue multiple to nearly 18x, raising concerns about sustainability. Meanwhile, defense sector interest in drones created a false narrative of diversification, masking Archer’s reliance on FAA approvals. The drop coincided with a 23% weekly surge, triggering profit-taking as short-term traders cashed in amid heightened volatility.

Aerospace & Defense Sector Mixed as ACHR Dives
The broader Aerospace & Defense sector showed mixed performance, with sector leader Lockheed Martin (LMT) down 0.42%. While defense-related optimism buoyed some names, Archer’s plunge was not directly tied to sector fundamentals. The stock’s 11.1% drop outpaced the sector’s volatility, suggesting more idiosyncratic factors—namely, overvaluation fears and regulatory uncertainty—were at play rather than a broader industry selloff.

Options Volatility and ETFs Signal High-Risk, High-Reward Setups
• Key Technicals:
- 200-day average: $8.07 (below current price)
- RSI: 74.23 (overbought territory)
- MACD: 0.573 (bullish divergence)
- Bollinger Bands: Lower band at $8.73 (critical support)
- 30D/200D support: $9.93–$3.15 (wide range signals high volatility)

Traders should focus on key levels: $11.80 (current price), $11.50 (psychological floor), and $13.48 (intraday high). The stock’s 74.23 RSI suggests overbought conditions, but the MACD’s positive divergence hints at lingering bullish momentum. For leveraged exposure, the XIV (short-volatility ETF) could benefit from a continuation of high volatility, though its inverse structure demands caution.

Top Options Contracts:
• ACHR20250725P11.5
- Put option, strike: $11.50, expires 7/25
- IV ratio: 77.99% (high volatility)
- Delta: -0.35 (moderate sensitivity)
- Theta: -0.0007 (minimal time decay)
- Gamma: 0.343 (high sensitivity to price swings)
- Turnover: $90,451 (liquid)
- Leverage ratio: 43.89% (aggressive)
- Payoff at 5% downside: $0.31 (max gain if price falls to $11.22)
- This contract stands out for its high leverage and gamma, ideal for a sharp drop below $11.50.

• ACHR20250801P12.5
- Put option, strike: $12.50, expires 8/1
- IV ratio: 77.18% (elevated)
- Delta: -0.29 (moderate exposure)
- Theta: -0.066 (moderate time decay)
- Gamma: 0.322 (responsive to price changes)
- Turnover: $151,646 (liquid)
- Leverage ratio: 62.37% (very aggressive)
- Payoff at 5% downside: $0.70 (max gain if price falls to $11.22)
- This option offers higher leverage than the July 25 put, with a longer expiry to capture extended volatility. Aggressive bears may consider this for a deeper pullback.

Trading Hook: If $11.80 breaks, ACHR20250801P12.5 offers a high-leverage play on a potential 10% drop. Bulls should watch for a rebound above $13.48 to re-enter long positions.

Backtest Archer Aviation Stock Performance
The ACH (Intraday Currency) strategy has historically shown resilience after experiencing a significant intraday plunge of at least -11%. The backtest data reveals that such events have occurred three times over the past five years, with the strategy exhibiting positive returns in 80% of the 30-day periods following these events.

Volatility Continues: Position for the Next Move
Archer Aviation’s 11.1% drop has created a critical inflection point. While the stock’s 2027 revenue multiple of 18x remains lofty, its aggressive production roadmap and FAA approval timeline offer long-term catalysts. Traders should monitor the $11.50 support level and the $13.48 intraday high as key decision points. The sector leader, Lockheed Martin (LMT), down 0.42%, signals mixed broader industry sentiment. Action: Position for a rebound above $13.48 or a breakdown below $11.80 to capitalize on the next directional move.