BridgeBio Pharma Plummets 7.7%: What's Behind the Sharp Selloff?

Summary
• BridgeBio Pharma (BBIO) slumps 7.73% intraday, trading at $72.185 amid heavy volume of 1.83 million shares.
• The stock breaches its 30-day moving average of $73.45 and tests the lower Bollinger Band at $72.01.
• Options activity surges, with the BBIO20260116P72.5 put contract seeing $1.26 million in turnover.

BridgeBio Pharma’s sharp intraday decline has ignited volatility in the biotech sector, with the stock trading near its 52-week low of $28.10. The move follows a technical breakdown below key support levels and a surge in put options trading, signaling heightened bearish sentiment. Traders are now scrutinizing whether this selloff reflects broader sector weakness or a standalone catalyst.

Bearish Momentum Unfolds as Technicals Signal Deterioration
The 7.73% intraday drop in BBIO is driven by a confluence of technical breakdowns and bearish options positioning. The stock has pierced the lower Bollinger Band at $72.01, a critical support level derived from its 20-day volatility. Meanwhile, the MACD histogram has turned negative (-0.23), indicating a loss of upward momentum despite the RSI remaining at 67. The options chain reveals aggressive short-term bearish bets, with the BBIO20260116P72.5 put contract (strike price $72.50) seeing 4,085 contracts traded and a 59.81% price change ratio. This suggests institutional positioning for further downside ahead of the January 16 expiration.

Biotech Sector Under Pressure as AMGN Drags Down
The biotech sector is broadly underperforming, with sector leader Amgen (AMGN) down 2.68% intraday. While BBIO’s selloff is more pronounced, the sector’s 2.68% decline in AMGN reflects broader risk-off sentiment. BBIO’s 7.73% drop outpaces the sector’s average, suggesting specific catalysts such as technical breakdowns or options-driven selling rather than a sector-wide event. However, the correlation with AMGN’s weakness underscores the fragile risk environment for biotech names.

Options Playbook: Capitalizing on Volatility and Time Decay
• MACD: 2.21 (Signal Line: 2.45, Histogram: -0.23)
• RSI: 67.0 (near overbought but bearish divergence)
• Bollinger Bands: $72.01 (lower band)
• 30D MA: $73.45 (broken)
• 200D MA: $49.87 (far below)

BBIO’s technical profile suggests a short-term bearish bias, with the 30-day moving average at $73.45 acting as a critical resistance. The RSI’s 67 reading, while not overbought, shows weakening momentum. The 200-day average at $49.87 remains a long-term floor, but near-term support at $72.01 (lower Bollinger Band) is under immediate pressure. Options traders are capitalizing on this volatility, with the BBIO20260116P72.5 and BBIO20260116C70 contracts offering high leverage and liquidity.

Top Option 1: BBIO20260116P72.5 (Put)
• Code: BBIO20260116P72.5
• Type: Put
• Strike Price: $72.50
• Expiration: 2026-01-16
• IV: 64.42% (high volatility)
• Leverage Ratio: 21.14% (moderate)
• Delta: -0.48 (sensitive to price moves)
• Theta: -0.0068 (low time decay)
• Gamma: 0.0472 (high sensitivity)
• Turnover: $1.26 million (liquid)

This put contract offers a balance of leverage and liquidity, with a delta of -0.48 indicating it will move ~48% of the underlying’s price change. The high gamma (0.0472) means its delta will increase rapidly if BBIO breaks below $72.01. A 5% downside to $68.57 would yield a payoff of $3.93 per contract, or ~54.7% return on the strike price.

Top Option 2: BBIO20260116C70 (Call)
• Code: BBIO20260116C70
• Type: Call
• Strike Price: $70.00
• Expiration: 2026-01-16
• IV: 71.57% (high volatility)
• Leverage Ratio: 14.46% (moderate)
• Delta: 0.627 (moderate sensitivity)
• Theta: -0.2889 (high time decay)
• Gamma: 0.0403 (moderate sensitivity)
• Turnover: $376,083 (liquid)

This call offers a bullish hedge if BBIO rebounds above $73.45. The high theta (-0.2889) means it decays rapidly, but the 0.627 delta ensures it benefits from a rebound. A 5% upside to $75.80 would yield a $5.80 payoff, or ~82.9% return on the strike price. Aggressive bulls may consider this into a bounce above $73.45.

Backtest BridgeBio Pharma Stock Performance
The backtest of BBIO's performance after an intraday plunge of -8% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 49.19%, the 10-Day win rate is 58.50%, and the 30-Day win rate is 62.55%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest was 19.87% over 30 days, suggesting that BBIO has the potential for recovery and even exceed pre-plunge levels.

Urgent Action Required: Navigating BBIO's Volatile Crossroads
BridgeBio Pharma’s 7.73% intraday drop has created a critical inflection point, with the stock testing its lower Bollinger Band and 30-day moving average. The options chain reveals aggressive bearish positioning, particularly in the BBIO20260116P72.5 put contract, which could accelerate the selloff if support at $72.01 fails. Meanwhile, the sector’s weakness—exemplified by AMGN’s 2.68% decline—highlights broader risk-off sentiment. Traders should monitor the $72.01 level and the 200-day average at $49.87 as key thresholds. For those seeking leverage, the BBIO20260116P72.5 put offers a high-gamma, high-liquidity play on further downside. Watch for a breakdown below $72.01 or a rebound above $73.45 to dictate next steps.