Arm Holdings Plummets 2.09% Amid Technical Downtrend and Options Volatility – What’s Next?

Summary
• Arm Holdings (ARM) trades at $110.92, down 2.09% from its previous close of $113.29
• RSI at 19.64 signals oversold conditions, while MACD (-8.39) and negative histogram confirm bearish momentum
• Options chain shows heavy bearish positioning with 311 contracts traded at the $113 call strike

Arm Holdings faces a sharp intraday selloff as technical indicators and options activity align with a short-term bearish bias. The stock’s decline to $110.29, its lowest since late 2024, coincides with elevated implied volatility and a deteriorating MACD crossover. Traders are now scrutinizing key support levels and options positioning for clues on the next move.

Technical Downtrend and Bearish Options Flow Drive Sharp Decline
The 2.09% drop in Arm Holdings reflects a confluence of technical exhaustion and bearish options positioning. The RSI at 19.64—a level typically associated with oversold conditions—suggests short-term momentum has collapsed. Meanwhile, the MACD (-8.39) remains below its signal line (-6.48), with the histogram (-1.91) widening to confirm deepening bearish pressure. The stock’s price action has also breached its 200-day moving average ($137.58), triggering stop-loss cascades and amplifying downward momentum. Options data reinforces this narrative: the $113 call (ARM20251226C113) has seen 32,887 contracts traded, with a -61.98% price change ratio, indicating aggressive bearish bets ahead of the December 26 expiration.

Semiconductor Sector Sidelined as ARM Underperforms Sector Leader Intel
While Arm Holdings plunges, the semiconductor sector remains broadly neutral. Intel (INTC), the sector’s leader, has only dipped 0.25% intraday, suggesting ARM’s selloff is stock-specific rather than sector-driven. The divergence highlights ARM’s vulnerability amid its elevated dynamic P/E ratio (159.6) compared to INTC’s more moderate valuation. However, the sector’s mixed performance—anchored by INTC’s resilience—indicates broader semiconductor demand remains intact, offering a potential floor for ARM if its technicals stabilize.

Bearish Options and ETF Positioning: Key Plays for ARM’s Volatile Finish
• RSI: 19.64 (oversold)
• MACD: -8.39 (bearish), Signal Line: -6.48
• Bollinger Bands: Lower band at $110.38 (near current price)
• 200-Day MA: $137.58 (price below by 19.6%)

Arm Holdings is trapped in a bearish technical setup, with its price near the lower Bollinger Band and critical support levels. The 200-day MA remains a distant target, but the RSI’s oversold reading suggests a short-term rebound could materialize. However, options data tells a different story: bearish positioning dominates, with the $113 call (ARM20251226C113) and $111 call (ARM20251226C111) showing high leverage ratios and liquidity. These contracts are ideal for short-term bearish plays given their high gamma and theta decay.

Top Option 1: ARM20251226C113
• Strike Price: $113
• Expiration: 2025-12-26
• IV: 32.35% (moderate)
• Leverage Ratio: 160.66%
• Delta: 0.296 (moderate sensitivity)
• Theta: -0.497 (rapid time decay)
• Gamma: 0.092 (high sensitivity to price swings)
• Turnover: 32,887

This call option is a high-leverage play for bearish traders. Its high gamma ensures significant price sensitivity if ARM continues lower, while the moderate IV and high turnover ensure liquidity. A 5% downside to $105.37 would yield a payoff of $7.93 per contract, offering a 49% return on the premium paid.

Top Option 2: ARM20251226C111
• Strike Price: $111
• Expiration: 2025-12-26
• IV: 30.16% (moderate)
• Leverage Ratio: 82.11%
• Delta: 0.496 (strong sensitivity)
• Theta: -0.733 (rapid decay)
• Gamma: 0.114 (very high sensitivity)
• Turnover: 14,982

This contract offers a balanced risk-reward profile. Its high gamma and moderate IV make it ideal for a sharp decline, while the high turnover ensures ease of entry/exit. A 5% drop would generate a $10.93 payoff, translating to a 133% return on the premium.

Trading Hook: Aggressive bears should target ARM20251226C113 for a 49%+ return if the stock breaks below $110.38. Conservative traders may short ARM20251226C111 for a 133% upside if the 200-day MA ($137.58) fails as support.

Backtest Arm Holdings Stock Performance
The performance of ARM Holdings following a -2% intraday plunge in February 2022 can be summarized as follows:1. Market Reaction and Strategic Shift: After Nvidia's announcement of abandoning its $40 billion acquisition deal, ARM's stock was expected to be negatively impacted. However, ARM's management team, led by Rene Haas, moved swiftly to reassure investors about the company's independence and long-term prospects.2. Stock Performance: Despite the initial market volatility, ARM's stock has shown resilience. Following the acquisition news, ARM's stock price experienced a brief dip, but it has since recovered and even surpassed previous levels. As of the latest data, ARM's stock is trading higher than its pre-February 2022 levels.3. Investor Sentiment: The shift in investor sentiment has been positive, with many analysts and investors viewing ARM's independence as a strategic advantage. The company's unique position in the semiconductor industry, with its ARM architecture being widely licensed by chipmakers, is seen as a key strength.4. Long-Term Outlook: ARM's focus on licensing its technology rather than manufacturing its own chips has allowed it to maintain a neutral position in the competitive semiconductor market. This business model, coupled with the growing demand for ARM-based chips in the AI and IoT sectors, is expected to support ARM's continued growth and profitability.In conclusion, while ARM experienced a temporary setback following Nvidia's acquisition withdrawal, the company's stock has rebounded, and its strategic positioning in the semiconductor industry is likely to contribute to its long-term performance positively.

ARM’s Technical Weakness and Options Volatility Signal High-Risk Rebound or Breakdown
Arm Holdings’ 2.09% drop underscores a critical juncture in its technical structure. The RSI’s oversold reading and Bollinger Band proximity suggest a short-term rebound is possible, but the MACD’s bearish divergence and heavy bearish options positioning warn of deeper declines. Traders should monitor the $110.38 lower band and the 200-day MA ($137.58) as pivotal levels. Meanwhile, the sector leader Intel’s -0.25% move indicates broader semiconductor demand remains intact, offering a potential floor for ARM if its technicals stabilize. Action Alert: Watch for a breakdown below $110.38 or a rebound above the 200-day MA to dictate next steps.