Coherent Plummets 20% Intraday: What's Fueling the Selloff in a Booming Telecom Sector?

Summary
• Coherent (COHR) tumbles 20.12% to $91.07, its lowest since April 2025
• Intraday range of $86.50–$92.83 signals sharp volatility
• Sector peers like IPG Photonics (IPGP) dip 1.19%, hinting at broader pressure
• Options frenzy: 2025-08-22 expiration sees 20 contracts trading with leveraged puts surging 200%

Coherent’s dramatic intraday collapse has ignited market speculation as the stock trades at a 29% discount to its 52-week high of $123.25. With telecom sector news highlighting 5G expansion and AI-driven infrastructure upgrades, the disconnect between macro trends and COHR’s performance demands scrutiny. The stock’s -175.63x P/E ratio and 16.5% turnover rate suggest a liquidity-driven selloff, but the root cause remains elusive.

Options Volatility and Short-Selling Pressure Drive COHR’s Sharp Decline
The selloff is fueled by a surge in leveraged put options and aggressive shorting. The COHR20250822P88 put option (strike $88) has seen 629 contracts traded with a 70.45% leverage ratio, while the COHR20250822C90 call (strike $90) shows -63.35% price change. This suggests institutional players are capitalizing on the stock’s proximity to its 200-day moving average ($86.50) and the lower Bollinger Band ($93.32). The -20.12% intraday drop aligns with the bearish 'engulfing' candlestick pattern, indicating a potential breakdown below key support levels.

Communication Equipment Sector Mixed as IPG Photonics Drags Down Peers
The Communication Equipment sector (XLC) shows mixed momentum with IPG Photonics (IPGP) down 1.19% despite broader telecom infrastructure optimism. While 5G network upgrades and AI-driven telecom solutions dominate headlines, COHR’s -20.12% move outpaces sector volatility. This divergence suggests COHR’s decline is stock-specific, possibly linked to its exposure to laser technology markets facing near-term headwinds.

Bearish Options Playbook: Leveraged Puts and Short-Strangle Setup
• MACD: 6.10 (above signal line 5.63), RSI: 71.25 (overbought), Bollinger Bands: 93.32 (lower band), 200D MA: 86.50 (below price)
• Key Levels: 93.32 (Bollinger Band), 86.50 (200D MA), 85 (major put strike)
• Short-Term Outlook: Price near 200D MA suggests potential for 10-15% rebound if buyers emerge at 86.50

Top Options:
• COHR20250822P88 (Put):
- IV: 49.06% (moderate)
- Leverage: 70.45% (high)
- Delta: -0.2842 (moderate bearishness)
- Theta: -0.004151 (slow decay)
- Gamma: 0.048053 (responsive to price swings)
- Turnover: $78,092 (liquid)
- Payoff at 5% down: $3.50 (max profit if price drops below $88)
- Why: High leverage and liquidity make this ideal for aggressive short-term bearish bets

• COHR20250822C90 (Call):
- IV: 29.53% (low)
- Leverage: 34.56% (moderate)
- Delta: 0.663562 (moderate bullishness)
- Theta: -0.359922 (rapid decay)
- Gamma: 0.085925 (high sensitivity)
- Turnover: $279,083 (very liquid)
- Payoff at 5% down: $0 (no profit if price drops below $90)
- Why: Liquid and responsive to rebounds, but high theta makes it risky for long-term holds

Trading Setup: Aggressive short-sellers should prioritize the COHR20250822P88 put for leveraged downside exposure. If price stabilizes above 86.50, consider a short-strangle with COHR20250822C90 to capture volatility. Watch for a breakdown below 86.50 to trigger a 15-20% move toward 85 support.

Backtest Coherent Stock Performance
The 20% intraday plunge in COHR has historically led to positive short-to-medium-term gains. The backtest data shows that after such a significant drop, COHR tends to recover and even exceed its original price:1. COHR's Tendency to Recover: - The 3-day win rate is 57.79%, indicating that COHR recovered in the first three days after the plunge. - The 10-day win rate is 58.17%, suggesting a higher probability of recovery within two weeks. - The 30-day win rate is 60.84%, showing that COHR often recovers within a month.2. Return on Recovery: - The average 3-day return is 1.24%, meaning COHR typically gains some value in the first three days after the plunge. - The average 10-day return is 2.60%, indicating a stronger recovery trend over the next two weeks. - The average 30-day return is 8.05%, with a maximum return of 17.55% observed on day 59, suggesting that COHR can experience significant gains in the short term after a steep drop.3. Maximum Return Timing: - The maximum return of 17.55% was observed on day 59, which is within the 30-day window, highlighting the potential for substantial gains if the recovery is timely.In conclusion, while a 20% intraday plunge in COHR is a significant event, the historical data suggests that the ETF tends to recover and perform well in the immediate aftermath. Investors might consider this information when assessing the potential impact of such a drop on their investment strategy.

Critical Juncture for COHR: Break Below 86.50 Triggers 15% Downside
The immediate focus is on COHR’s ability to hold above its 200-day moving average at $86.50. A breakdown would validate the bearish engulfing pattern and open the door to a 15-20% move toward $85 support. Conversely, a rebound above 93.32 (Bollinger Band) could spark a short-covering rally. Sector leader IPG Photonics (-1.19%) suggests broader communication equipment sector caution. Aggressive traders should prioritize the COHR20250822P88 put for leveraged downside exposure, while conservative investors should wait for a confirmed breakout above 93.32 before considering long positions.