Arm Holdings Plunges 3.9% Intraday—Is This a Correction or a Warning Signal?

Summary
• Arm Holdings (ARM) trades at $155.61, down 3.9% from its $161.00 open as of 3:36 PM ET on 2025-07-22
• Intraday range spans $153.24 to $162.13, with $14.2602 in the 2X Long ARM Daily ETF (ARMG) down 7.88%
• MACD remains above signal line at 4.05, RSI neutral at 50.23, and 200D MA at $136.05
Today’s selloff in Arm Holdings has traders questioning whether the pullback reflects profit-taking in a long-term range-bound stock or early signs of a bearish shift. With options volatility spiking and a leveraged ETF tracking ARM down 7.88%, the technical and sentiment dynamics are sharply in focus.

Profit-Taking in a Range-Bound Regime
The 3.9% intraday drop in Arm Holdings aligns with a broader pattern of short-term profit-taking amid a long-term ranging market structure. While the stock’s 52-week high of $182.88 and 52-week low of $80 suggest a historically volatile asset, today’s move reflects a breakdown from key technical levels. The 30-day moving average at $149.26 and 200D MA at $136.05 form a bearish divergence with the current price of $155.61, indicating waning momentum. Additionally, the RSI’s neutral 50.23 reading and MACD’s 0.059 histogram suggest a fragile bullish bias, with sellers stepping in decisively.

Semiconductor Sector Decoupled from ARM’s Selloff
Options Playbook for a Volatile Setup
• 200D MA: $136.05 (below current price)
• RSI: 50.23 (neutral)
• MACD: 4.05 (bullish divergence), Signal Line: 3.99, Histogram: 0.059 (weak bullish)
• Bollinger Bands: Price at $155.61 sits within the $141.61–$165.69 range, near the 200D MA
• Leveraged ETF: ARMG (-7.88%) suggests aggressive bearish sentiment

Two options contracts stand out for a bearish bias:

• ARM20250725C155 (Call):
  • Strike: $155, Expiry: 2025-07-25
  • IV: 51.17% (moderate), Delta: 0.5327, Theta: -1.28, Gamma: 0.0478, Turnover: 386,590
  • Payoff (5% downside): $5.61
• ARM20250725C157.5 (Call):
  • Strike: $157.5, Expiry: 2025-07-25
  • IV: 51.00% (moderate), Delta: 0.4139, Theta: -1.08, Gamma: 0.0470, Turnover: 188,190
  • Payoff (5% downside): $2.96

These contracts offer asymmetric potential in a 5% downside scenario, with ARM20250725C155 showing higher liquidity and a balanced delta-gamma profile. Aggressive short-sellers might consider ARM20250801P148 (Put) if a breakdown below $144.109 support triggers a sharper decline.

Backtest Arm Holdings Stock Performance
The ARM ETF has historically shown positive short-to-medium-term performance following a -4% intraday plunge. The backtest data reveals that the 3-day win rate is 59.36%, the 10-day win rate is 65.75%, and the 30-day win rate is 68.49%. Additionally, the average returns over these periods are positive, with a 3-day return of 1.11%, a 10-day return of 4.06%, and a 30-day return of 10.99%. The maximum return during the backtest period was 20.67%, which occurred on day 59 after the initial plunge.

Short-Term Volatility to Test $144.109 Support
The current move in Arm Holdings reflects a tug-of-war between a long-term ranging structure and short-term bearish momentum. With RSI neutral and MACD divergence fading, the critical test lies in the 30D support band ($144.109–$144.756). A break below this could validate a bearish pivot, particularly as the 2X Long ARM ETF (ARMG) signals aggressive short-term pessimism. Sector leader Intel (INTC) is up 0.62%, highlighting ARM’s decoupling from semiconductors. Traders should prioritize liquidity-focused options like ARM20250725C155 and monitor the 200D MA ($136.05) as a final defense line.

Action: Watch for $144.109 breakdown or news catalysts before committing to longs.