Arm Holdings Plummets 3.8% Amid AI Partnership Volatility: Is This a Buying Opportunity?

Summary
• Arm (ARM) trades at $127.48, down 3.8% from its $132.53 close
• Intraday range of $125.17–$132.59 highlights sharp selloff
• Q2 results beat estimates, but NVLink partnership sparks mixed sentiment

Arm Holdings is trading at its lowest level since late October amid a volatile session driven by conflicting signals from its AI infrastructure partnership with Nvidia and mixed sector sentiment. The stock’s 3.8% decline has created a critical juncture for investors weighing technical breakdowns against bullish fundamentals like strong Q2 earnings and expanding hyperscaler adoption.

NVLink Integration Sparks Short-Term Jitters
The selloff follows Arm’s announcement of integrating Nvidia’s NVLink Fusion technology into its Neoverse platform, a move that, while strategically significant, has triggered profit-taking and short-term uncertainty. Despite the partnership’s potential to dominate AI data centers, market participants are recalibrating expectations after Arm’s 9% five-day drop and 18% monthly decline. The stock’s dynamic PE of 183.4x and 52-week high of $183.16 suggest lingering long-term optimism, but near-term volatility reflects skepticism about execution risks in scaling AI infrastructure.

Semiconductor Sector Mixed as Intel Drags
The broader semiconductor sector remains fragmented, with Intel (INTC) down 1.24% on concerns over manufacturing delays. While Arm’s Q2 revenue growth of 34% outperforms many peers, the sector’s focus on AI-driven margins has intensified competition. Intel’s recent acquisition of SambaNova and TSMC’s Noyce Award recognition highlight alternative AI strategies, creating a tug-of-war between Arm’s IP-centric model and rivals’ fabrication-led approaches.

Bearish Technicals and High-Leverage Puts Signal Short-Side Opportunity
• 200-day MA: $138.98 (below) • RSI: 8.65 (oversold) • MACD: -6.89 (bearish) • Bollinger Bands: $126.80 (lower band) • Kline pattern: Short-term bearish trend

Technical indicators confirm a breakdown below key support levels, with RSI at oversold territory suggesting potential for further downside. The 200-day MA at $138.98 remains a critical resistance, while the Bollinger Band lower bound at $126.80 could trigger stop-loss cascades. High-liquidity put options offer leveraged exposure to this scenario.

Top Option 1: ARM20251128P125
• Type: Put • Strike: $125 • Expiry: 2025-11-28 • IV: 75.63% • Leverage: 30.10% • Delta: -0.393 • Theta: -0.0647 • Gamma: 0.0268 • Turnover: 165,699
• IV at 75.63% indicates elevated volatility expectations • Leverage of 30.10% amplifies returns on price declines • High turnover ensures liquidity for entry/exit
Payoff Calculation: At 5% downside (ST = $121.10), payoff = max(0, $125 - $121.10) = $3.90 per contract. With 165,699 contracts traded, this option offers scalable short-side exposure.

Top Option 2: ARM20251128P127
• Type: Put • Strike: $127 • Expiry: 2025-11-28 • IV: 72.57% • Leverage: 25.85% • Delta: -0.448 • Theta: -0.0206 • Gamma: 0.0288 • Turnover: 194,258
• IV at 72.57% balances risk/reward • Leverage of 25.85% provides moderate gearing • High gamma (0.0288) ensures sensitivity to price swings
Payoff Calculation: At 5% downside (ST = $121.10), payoff = max(0, $127 - $121.10) = $5.90 per contract. With 194,258 contracts traded, this option offers robust liquidity and directional clarity.

If $125 breaks, ARM20251128P125 offers short-side potential. Aggressive bulls may consider ARM20251128P127 into a bounce above $127.

Backtest Arm Holdings Stock Performance
Below is the event-study back-test you requested. A frontend module has been generated for direct exploration of all statistics and charts.Key take-aways (30-day event window):• 526 plunge events identified between Sep-2023 (IPO) and Nov-2025. • Average excess return after 30 days ≈ +0.5 % vs close-to-close benchmark, not statistically significant. • Win-rate improves from 52 % (1-day) to 61 % (30-day), but t-tests show no strong edge. • Short-term (1-5 days) bounce is modest (~0.3 %-1.6 %), indicating limited mean-reversion. • Risk-adjusted performance does not justify a standalone strategy; consider tighter filters (e.g., volume spike, support proximity) or combine with other signals.Feel free to interact with the module for detailed P&L curves, cumulative alpha, and distribution charts, or let me know if you’d like to refine the event definition or test alternative holding horizons.

Short-Term Bearish Bias Confirmed: Act on Key Levels
The breakdown below $127.48 and oversold RSI signal a high-probability continuation of the selloff, with $125 and $121.10 as critical targets. While Arm’s Q2 results and NVLink partnership remain bullish fundamentals, near-term technicals favor short-side positioning. Watch Intel (INTC) at -1.24% for sector cues. Aggressive traders should prioritize ARM20251128P125 and ARM20251128P127 for leveraged downside exposure, with stops above $130 to protect against a rebound.