DocuSign Plummets 7.5%: What's Behind the Sudden Slide?

Summary
• DocuSign (DOCU) trades at $69.51, down 7.5% from its $75.14 open
• Intraday range spans $69.50 to $75.69, signaling sharp volatility
• Options chain shows 528.57% price surge in 65-strike put and 77.23% drop in 71-strike call

DocuSign's dramatic intraday selloff has captured market attention as the stock collapses from its 52-week high of $107.86 to near its 52-week low of $50.78. With insider selling, analyst downgrades, and a bearish technical setup converging, traders are scrambling to decipher the catalysts behind this 7.5% drop. The stock's 48.7x P/E ratio and $15.18B market cap add urgency to the unfolding narrative.

Insider Selling and Analyst Downgrades Trigger Sharp Selloff
The selloff was catalyzed by a combination of insider selling and analyst downgrades. CEO Allan Thygesen and CFO Blake Grayson executed significant share sales, with Thygesen reducing his stake by 21.74% and Grayson by 12.03%. These actions, combined with Citigroup's $115-to-$110 price target cut and UBS's $85-to-$80 downgrade, created a perfect storm of bearish sentiment. The stock's 48.7x P/E ratio, while below its 52-week average, now faces pressure from technical indicators showing a short-term bearish trend and oversold RSI levels.

Software—Application Sector Volatility: Adobe Leads Decline
The Software—Application sector is experiencing broad volatility, with Adobe (ADBE) down 3.65% as the sector leader. DocuSign's 7.5% drop outpaces the sector's average decline, suggesting specific catalysts beyond macro factors. While Adobe's decline reflects broader tech sector weakness, DocuSign's move is more pronounced due to its unique insider selling and analyst actions. The sector's 42.64% RSI level indicates moderate oversold conditions, but DocuSign's 42.64% RSI suggests it has further to fall relative to peers.

Bearish Options Play: 65-Strike Put and 71-Strike Call for Short-Term Volatility
• 200-day MA: $83.01 (well below current price)
• RSI: 42.64 (oversold but not extreme)
• MACD: -0.90 (bearish divergence)
• Bollinger Bands: Price at 72.35 (near lower band)

Key levels to watch include the 73.71 support and 75.06 resistance. With the stock trading below both its 30D and 200D moving averages, the technical picture remains bearish. The 65-strike put (DOCU20250815P65) offers 158.45% leverage with 46.90% implied volatility, while the 71-strike call (DOCU20250815C71) provides 65.16% leverage with 36.36% IV. Both options show strong liquidity (514 and 52 contracts traded respectively) and favorable Greeks for short-term volatility plays.

• DOCU20250815P65: Put option with 65 strike, 46.90% IV, 158.45% leverage, -0.158 delta, -0.015 theta, 0.047 gamma, 11,291 turnover
• DOCU20250815C71: Call option with 71 strike, 36.36% IV, 65.16% leverage, 0.393 delta, -0.208 theta, 0.097 gamma, 3,327 turnover

The 65-strike put benefits from high leverage and moderate delta, making it ideal for a 5% downside scenario where payoff would be $1.51 per contract. The 71-strike call, while bearish, offers directional exposure with 65% leverage. Traders should consider a 65/71 strangle for maximum volatility capture as the stock approaches its 8/15 expiration.

Backtest DocuSign Stock Performance
The performance of DOCU after a -7% intraday plunge has historically shown mixed results. While the 3-day win rate is 50.33%, indicating a roughly even chance of a positive return in the short term, the 10-day win rate is slightly higher at 53.16%. However, the 30-day win rate is lower at 49.50%, suggesting that while there is some likelihood of a recovery, it may take longer than expected.

Act Now: Short-Term Volatility Play with 65-Strike Put
The confluence of insider selling, analyst downgrades, and bearish technicals suggests this selloff could continue. With Adobe (ADBE) down 3.65% as sector leader, cross-sector caution is warranted. Aggressive traders should prioritize the 65-strike put (DOCU20250815P65) for a 5% downside scenario, while monitoring the 73.71 support level. The stock's 48.7x P/E ratio and $15.18B market cap suggest further downside potential if the 65-strike put's 46.90% IV holds. Watch for a breakdown below $69.50 to confirm the bearish case.