Coherent (COHR) Plunges 2.88% Amid Sector-Wide Turbulence: What’s Fueling the Selloff?

Summary
• Coherent (COHR) trades at $138.82, down 2.88% from its previous close of $142.94
• Intraday range spans $138.42 to $155.70, reflecting a volatile 11% swing
• Sector leader Lumentum (LITE) also slumps 9.79%, signaling broader industry pressure
• Analysts highlight earnings guidance cuts and strategic business divestitures as key triggers

Coherent’s sharp intraday decline has drawn urgent attention from traders and investors alike. The stock opened at $149.55 but has since cratered to $138.82, a 2.88% drop amid a sector-wide selloff. With the optical equipment sector reeling from mixed earnings and strategic shifts, COHR’s move reflects both company-specific and macro-level pressures. The stock’s 35.9 million turnover and 2.69% turnover rate underscore heightened trading activity, raising questions about the sustainability of this downward spiral.

Earnings Disappointment and Strategic Divestiture Spur Sell-Off
Coherent’s selloff is directly tied to its recent earnings report and strategic business decisions. The company announced a 20% drop in its stock following a revenue forecast that fell short of expectations and the sale of its aerospace and defense business to Advent for $400 million. While the divestiture aims to streamline operations, investors interpreted the move as a sign of waning growth potential in high-margin defense markets. Additionally, the company’s guidance for the next quarter, which excluded the aerospace segment, signaled cautious optimism about AI-driven demand but failed to offset concerns over near-term revenue stability. Analysts at Stifel and B of A downgraded the stock, citing valuation risks amid a broader sector correction.

Optical Equipment Sector Under Pressure as LITE Leads Decline
The optical equipment sector is experiencing a coordinated selloff, with Lumentum (LITE) leading the charge after a 9.79% intraday drop. Both COHR and LITE face headwinds from macroeconomic uncertainty and geopolitical tensions disrupting supply chains. However, COHR’s decline is more pronounced due to its recent earnings miss and strategic divestiture. The sector’s 52-week high of $168.57 for COHR contrasts sharply with its current price, highlighting the market’s skepticism about near-term recovery. Meanwhile, China’s advancements in photonic quantum chips and U.S.-China trade tensions are creating a dual-edged sword for optical equipment firms, balancing long-term innovation with short-term volatility.

Options and ETFs for Navigating COHR’s Volatility
• MACD: 6.49 (below signal line 8.20), indicating bearish momentum
• RSI: 56.01 (neutral, but trending downward)
• Bollinger Bands: Price at $138.82, near the lower band ($116.54), suggesting oversold conditions
• 200D MA: $91.91 (far below current price), signaling long-term bullish potential

Coherent’s technicals present a mixed picture. The stock is near its 52-week low but remains above key moving averages, suggesting a potential rebound. Traders should monitor the 140.64 middle Bollinger Band as a critical support/resistance level. The 30D MA at $132.33 and 200D MA at $91.91 highlight a long-term bullish trend, but short-term volatility remains high. Given the sector’s exposure to AI and data center growth, a strategic long-term hold may be justified, though near-term caution is warranted.

Top Options Contracts:
• COHR20251128P136 (Put):
- Strike: $136, Expiration: 2025-11-28
- IV: 57.12% (moderate), Leverage: 39.12% (high), Delta: -0.3859 (moderate bearishness), Theta: -0.0025 (low time decay), Gamma: 0.0307 (high sensitivity)
- Turnover: 10,996 (liquid)
- Payoff at 5% Downside: $1.82 per contract (max profit if COHR drops below $136)
- Why it stands out: High leverage and gamma make this put ideal for capitalizing on a short-term bearish move, with low theta reducing decay risk.

• COHR20251128P135 (Put):
- Strike: $135, Expiration: 2025-11-28
- IV: 59.63% (moderate), Leverage: 41.46% (high), Delta: -0.3592 (moderate bearishness), Theta: -0.0258 (low decay), Gamma: 0.0287 (high sensitivity)
- Turnover: 959 (liquid)
- Payoff at 5% Downside: $3.50 per contract (strong profit potential if COHR dips below $135)
- Why it stands out: Balances leverage and liquidity, offering a safer bet for a moderate bearish scenario with minimal time decay.

Trading Insight: Aggressive short-sellers may target COHR20251128P136 for a 5% downside play, while conservative traders could use COHR20251128P135 as a hedge. Both contracts benefit from COHR’s current volatility and sector-wide pessimism.

Backtest Coherent Stock Performance
To run a statistically-sound “event study” of COHR’s price behaviour after every −3 % intraday plunge (2022-01-01 → today), I need to pinpoint the exact dates on which this condition was met.Clarification needed:1. Definition of “intraday plunge –3 %”: • Option A (most common): the day’s low is at least 3 % below the previous day’s close, i.e. Low ≤ Close-1 × 0.97. • Option B: the day’s close is ≥ 3 % below that day’s open. • Option C: another definition you have in mind.2. Risk controls (if any) for the back-test: • Stop-loss, take-profit, or maximum holding days? • Default would be “no extra risk controls” and a fixed holding window (e.g., close the trade after N days; I’ll compute the statistically optimal N if you prefer).If Option A and default risk controls are acceptable, I’ll:• Re-fetch OHLC data (includes open, high, low, close). • Generate the event-date file where Low ≤ Close-1 × 0.97. • Feed those dates to the event-backtest engine and deliver a visual performance report.Let me know if Option A is fine (or adjust it) and whether you’d like any specific risk-control/holding-period settings.

Act Now: Position for COHR’s Volatility Amid Sector Uncertainty
Coherent’s selloff reflects a confluence of earnings disappointment, strategic divestitures, and sector-wide headwinds. While the stock’s long-term fundamentals remain intact—evidenced by its 28.28 dynamic PE and AI-driven growth prospects—the near-term outlook is clouded by volatility. Traders should prioritize options like COHR20251128P136 and COHR20251128P135 to capitalize on downward momentum, while long-term investors may find value at current levels. Watch Lumentum (LITE) closely, as its 9.79% drop underscores broader sector fragility. A break below $135 could trigger further selling, but a rebound above $140.64 middle Bollinger Band may signal a short-term bottom. Act now: Secure puts for downside protection or consider a long-term buy below $135.