Equinix Plummets 2.6% Amid Sector Turbulence: What's Fueling the Selloff?

Summary
• Equinix (EQIX) trades at $779.27, down 2.63% intraday
• Intraday range spans $758.9 (low) to $805.0 (high)
• BofA reiterates 'Buy' rating despite sharp decline
• Options chain shows heightened bearish positioning with 32% price change ratio on put contracts

Equinix’s sharp intraday selloff has captured market attention as the data center REIT trades near its 52-week low. The stock’s 2.63% drop—its largest intraday decline since October—coincides with broader sector weakness and a surge in put option activity. With the 52-week range of $701.41–$953.41 and a dynamic P/E of 52.89, investors are dissecting whether this is a correction or a deeper shift in sentiment.

Sector Weakness and Options Volatility Drive Sharp Decline
Equinix’s selloff aligns with broader pressure on data center REITs, as Digital Realty (DLR) fell 0.26% on the same day. The options market amplifies bearish sentiment: the EQIX20260116P770 put contract surged 360% in price, reflecting a 38.53% implied volatility spike. This contrasts with muted call volume, where the EQIX20260116C800 call saw a 80.63% price drop despite 23.30% implied volatility. The stock’s 79.78 RSI reading (overbought territory) and MACD histogram contraction suggest a technical correction is underway, exacerbated by institutional selling (e.g., New York State Teachers Retirement System reduced holdings by 5.9%).

Data Center REITs Under Pressure as Digital Realty Trails Sector Decline
Equinix’s 2.63% drop outpaces Digital Realty’s 0.26% decline, highlighting divergent investor sentiment within the sector. While DLR’s stable pricing reflects confidence in its U.S. colocation dominance, EQIX’s sharp selloff points to concerns over its global expansion risks and elevated valuation (52.89 P/E). The sector’s broader weakness—evidenced by Turkey and GCC data center reports emphasizing competitive pressures—suggests EQIX’s decline may not be isolated but part of a larger reassessment of REIT valuations in a high-interest-rate environment.

Bearish Options and ETF Positioning: Navigating the Correction
• 200-day MA: $803.69 (below current price)
• RSI: 79.78 (overbought)
• MACD: 6.17 (signal line 1.28, histogram 4.88)
• Bollinger Bands: $737.56 (lower) to $792.28 (upper)

Technical indicators suggest a short-term bearish bias, with key support at $758.9 (intraday low) and resistance at $775.05 (200D MA). The options chain offers two high-conviction plays:

• EQIX20260116P770 (Put):
- Strike: $770, Expiry: 2026-01-16
- IV: 38.53% (high volatility)
- Delta: -0.37 (moderate sensitivity)
- Theta: -0.16 (time decay)
- Gamma: 0.0108 (price sensitivity)
- Turnover: $2,264
- Why: High leverage ratio (83.91%) and IV suggest strong bearish potential if EQIX breaks below $770.

• EQIX20260116C800 (Call):
- Strike: $800, Expiry: 2026-01-16
- IV: 23.30% (moderate)
- Delta: 0.187 (low sensitivity)
- Theta: -1.10 (time decay)
- Gamma: 0.0126 (price sensitivity)
- Turnover: $30,938
- Why: High leverage ratio (362.95%) offers aggressive upside if EQIX rebounds above $800, though delta suggests limited directional exposure.

Payoff Estimation: A 5% downside to $740.31 would yield $29.69 profit for the P770 put (vs. $0 for the C800 call). Aggressive bulls may consider the C800 for a rebound above $800, while bears should target the P770 for a breakdown below $770.

Backtest Equinix Stock Performance
The backtest of EQIX's performance after an intraday plunge of -3% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 53.09%, the 10-Day win rate is 50.41%, and the 30-Day win rate is 59.47%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 1.79%, which occurred on day 58, suggesting that while the stock tended to recover modestly, the magnitude of the rebound was not exceptionally high.

Act Now: Position for Sector Rebound or Deeper Correction
Equinix’s 2.63% drop reflects a mix of sector-wide weakness and technical overbought conditions. While BofA’s ‘Buy’ rating and $900 price target offer long-term optimism, near-term volatility hinges on support at $758.9 and sector leader Digital Realty’s performance (-0.26% intraday). Investors should monitor the 200D MA ($803.69) as a critical reentry level. For immediate action, the EQIX20260116P770 put offers high leverage for a breakdown scenario, while the C800 call suits aggressive bulls. Watch for $758.9 support or a sector-wide rebound to $800 as key triggers.