DLR Plummets 3.1% Amid Sector Turbulence: What's Fueling the Selloff?

Summary
• Digital Realty Trust (DLR) trades at $162.4, down 3.1% from its $167.64 previous close
• Intraday range spans $161.69 to $165.92, with 948K shares traded (0.28% turnover)
• Sector leader Equinix (EQIX) lags behind with 1.85% intraday decline

DLR’s sharp selloff has ignited volatility in the Data Center REITs sector, with technical indicators and options activity painting a complex picture. The stock’s breakdown below key moving averages and elevated put options turnover suggest a critical juncture for long-term holders.

Technical Downtrend Intensifies as DLR Tests Key Support
DLR’s 3.1% intraday drop reflects a breakdown below its 30-day moving average ($171.22) and 200-day average ($168.74), confirming a bearish reversal after a short-term bullish pattern. The stock now trades near its lower Bollinger Band ($163.35), with RSI at 47.4 and MACD (-1.42) signaling oversold conditions. Put options turnover for the 9/12 expiration has surged, particularly for the 162.5 strike, indicating aggressive short-term bearish positioning.

Data Center REITs Under Pressure as EQIX Trails DLR's Slide
While DLR’s 3.1% decline outpaces the sector’s broader selloff, Equinix (EQIX) remains the sector’s relative outperformer at -1.85%. The divergence highlights DLR’s vulnerability to technical breakdowns versus EQIX’s more stable positioning. However, both stocks face headwinds from elevated implied volatility (DLR’s 21.53%–55.57% IV range) and a sector-wide pullback from 52-week highs.

Options Playbook: Capitalizing on DLR's Volatility with Strategic Puts
• 200-day average: $168.74 (below current price)
• RSI: 47.4 (neutral)
• MACD: -1.42 (bearish)
• Bollinger Bands: $163.35 (lower) to $172.94 (upper)

DLR’s technical profile suggests a critical test of $163.35 support and $168.74 200-day average. Two options stand out for bearish exposure:

• DLR20250912P162.5 (Put, $162.5 strike, 9/12 expiry):
- IV: 23.85% (moderate)
- LVR: 60.14% (high leverage)
- Delta: -0.49 (sensitive to price moves)
- Theta: -0.007 (low time decay)
- Gamma: 0.059 (responsive to volatility)
- Turnover: 1,350 (liquid)
- Payoff at 5% downside ($154.28): $8.22 per contract
- This put offers asymmetric reward with high gamma to capitalize on a sharp drop.

• DLR20250912P160 (Put, $160 strike, 9/12 expiry):
- IV: 24.71% (moderate)
- LVR: 95.52% (high leverage)
- Delta: -0.35 (moderate sensitivity)
- Theta: -0.037 (moderate decay)
- Gamma: 0.053 (volatility responsive)
- Turnover: 0 (caution advised)
- Payoff at 5% downside: $12.48 per contract
- Aggressive bearish play with higher leverage but lower liquidity.

Aggressive bears should prioritize DLR20250912P162.5 for its liquidity and gamma profile. If $163.35 support fails, this contract could outperform as volatility spikes.

Backtest Digital Realty Trust Stock Performance

DLR at Crossroads: Key Levels to Watch for Reversal or Breakdown
DLR’s immediate fate hinges on its ability to reclaim the $168.74 200-day average and $172.94 upper Bollinger Band. A sustained close below $163.35 would validate a bearish breakout, with DLR20250912P162.5 offering strategic short-term bearish exposure. Sector watchers should monitor Equinix’s (-1.85%) resilience for clues on broader REIT sentiment. Action: Target $163.35 support; if broken, initiate DLR20250912P162.5 for 5% downside potential.