Arista Networks Plummets 2.46%: What's Fueling the Sudden Selloff?

Summary
• Arista Networks (ANET) opens at $121.50, plunging to an intraday low of $116.66
• 52-week range of $59.43–$133.57 highlights current volatility
• Options volume surges with 104,922 contracts traded on 8/15 expirations

Today’s dramatic 2.46% decline in Arista Networks has triggered a cascade of options activity, with the stock trading below its 200-day moving average of $150.75. The Networking Equipment sector remains in neutral territory as Cisco Systems (CSCO) declines 0.89%, suggesting sector-wide caution but no direct catalyst for ANET’s sharp drop.

Technical Divergence and Overbought RSI Signal Correction
The selloff aligns with technical indicators showing exhaustion in the short-term bullish trend. With RSI at 72.63 (overbought territory) and MACD (5.55) above its signal line (5.20), the stock was primed for a pullback. The 200-day MA at $150.75 acts as a critical resistance level, while Bollinger Bands show the price is trading below the middle band at $112.72. This divergence between momentum and price suggests profit-taking after a recent rally.

Networking Equipment Sector Sinks With Broader Tech Weakness
The Networking Equipment sector remains under pressure as Cisco Systems (CSCO) declines 0.89%, reflecting broader tech sector jitters. While ANET’s 2.46% drop outpaces the sector’s modest decline, the sector’s 30-day average volume of 4.74 million shares suggests liquidity is intact. Sector leaders like CSCO show no direct correlation to ANET’s move, indicating stock-specific technical factors are driving the selloff.

Bearish Options Play and ETF Neutral Setup for ANET Volatility
• 200-day MA: $150.75 (above) • RSI: 72.63 (overbought) • MACD: 5.55 (bullish) • Bollinger Bands: $101.41–$124.03 • Implied Volatility: 65–103% (elevated)

Key levels to monitor include the 30-day support range of $108.21–$108.84 and the 200-day support band of $108.37–$115.70. With the stock trading below its 200-day MA and RSI in overbought territory, a short-term bearish bias is warranted. The ANET20250815P117 put (strike $117, IV 73.49%, leverage 21.00%, delta -0.4549, theta -0.0436, gamma 0.0264, turnover 5,864) offers high leverage and liquidity for a 5% downside scenario, projecting a $1.17 payoff. The ANET20250815C117 call (strike $117, IV 71.78%, leverage 18.97%, delta 0.5449, theta -0.4861, gamma 0.0271, turnover 104,922) balances directional exposure with time decay. Aggressive bears should consider ANET20250815P117 into a breakdown below $115.70.

Backtest Arista Networks Stock Performance
The performance of Arista Networks (ANET) after a -2% intraday plunge can be summarized as follows:1. Insider Selling Impact: The recent insider selling activity, including CEO Jayshree Ullal's significant share reductions, has likely contributed to the market's negative sentiment. Insider selling can be a signal to investors about the confidence that insiders have in the company's future performance.2. Analyst Ratings and Valuation Concerns: Evercore ISI's downgrade of ANET from 'Tactical Outperform' to 'Outperform' due to valuation concerns may have influenced the stock's performance. The downgrade suggests that the stock's current high valuation metrics, such as a 52.8 P/E ratio, are stretched compared to historical averages.3. Technical Overbought Conditions: Technical indicators, such as the stock trading 11% below its 200-day moving average, may indicate that the stock was due for a correction. This can lead to a sell-off as investors rebalance their positions.4. Sector Performance: The broader Communication Equipment sector's mixed performance, with Cisco Systems (CSCO) also experiencing a decline, suggests that ANET's performance is not isolated. The sector's optimism about AI infrastructure demand may not fully translate to ANET's stock price if the market perceives risks in the company's valuation.In conclusion, the -2% intraday plunge in ANET's stock price appears to be a continuation of the broader market concerns regarding its valuation and insider selling, rather than a fundamental shift in the company's underlying performance. The stock's future trajectory will likely depend on the outcome of these factors and the company's ability to manage investor expectations.

Act Now: Position for ANET’s Critical Support Test
The immediate outlook hinges on whether ANET can hold above its 30-day support range of $108.21–$108.84. A breakdown below $108.37 would validate a bearish reversal, while a rebound above $115.70 could reignite the short-term bullish trend. With Cisco (CSCO) down 0.89%, sector-wide caution persists. Investors should prioritize the ANET20250815P117 put for a high-leverage bearish play and monitor the 200-day MA at $150.75 as a long-term resistance level. Watch for $115.70 breakdown or sector-wide reversal signals.