EWTX Plummets 9.8% Amid Sector Turbulence: What’s Fueling the Selloff?

Summary
• Edgewise (EWTX) trades at $23.05, down 9.78% from its $25.55 previous close
• Intraday range spans $22.4–$25.39, with turnover surging to 917,253 shares
• Sector leader Cisco (CSCO) declines 0.36%, signaling broader Communication Equipment sector fragility

Edgewise’s sharp intraday selloff has captured market attention, with the stock trading nearly 10% below its previous close. The Communication Equipment sector, already under pressure from mixed AI infrastructure news, sees EWTX’s collapse as a standout event. With Bollinger Bands tightening and options volatility spiking, traders are scrambling to decode the catalyst behind this dramatic move.

Sector-Wide Jitters Over AI Infrastructure Uncertainty
The Communication Equipment sector is grappling with uncertainty as AI-driven infrastructure demands reshape market expectations. Recent sector news highlights debates over fiber network topologies, AI-native data centers, and regulatory shifts in cloud-to-on-prem migration. While EWTX lacks specific company news, the broader sector’s anxiety over capital intensity and competitive positioning in AI networking has spilled into its shares. The stock’s 9.8% drop aligns with a flight to safety amid sector-wide profit-taking and speculative unwinding.

Communication Equipment Sector Under Pressure as EWTX Lags Behind
Cisco Systems (CSCO), the sector’s bellwether, has fallen 0.36% intraday, reflecting cautious sentiment. However, EWTX’s 9.8% decline dwarfs this, suggesting unique vulnerabilities. The stock’s 52-week low of $10.6 and negative dynamic PE ratio (-15.57) underscore structural challenges. While CSCO’s decline is a sector-wide trend, EWTX’s collapse points to deeper concerns about its AI infrastructure positioning and liquidity profile.

Options Playbook: Capitalizing on Volatility with EWTX20260116P22 and EWTX20260116C23
• 200-day MA: $16.69 (well below current price)
• RSI: 51.19 (neutral territory)
• MACD: 0.76 (bullish divergence), Signal Line: 1.04 (bearish crossover)
• Bollinger Bands: $21.35–$26.05 (price near lower band)

EWTX’s technicals present a volatile setup. The stock is trading near its 200-day MA and lower Bollinger Band, with RSI hovering around neutrality. The MACD histogram’s negative divergence suggests short-term bearish momentum. For options traders, two contracts stand out: EWTX20260116P22 and EWTX20260116C23.

• EWTX20260116P22 (Put): Strike $22, Expiry 1/16/2026
- IV: 148.16% (high volatility)
- Delta: -0.37 (moderate sensitivity)
- Theta: -0.0477 (moderate time decay)
- Gamma: 0.0417 (responsive to price swings)
- Turnover: 3,645 (liquid)
- Leverage: 7.64% (high)
- Price change: -8.79% (bearish)
This put option offers high leverage and liquidity, ideal for a 5% downside scenario. Projected payoff: $1.05 per contract (max profit if EWTX drops to $21.95).

• EWTX20260116C23 (Call): Strike $23, Expiry 1/16/2026
- IV: 151.52% (elevated)
- Delta: 0.58 (moderate sensitivity)
- Theta: -0.0853 (aggressive time decay)
- Gamma: 0.0419 (high sensitivity)
- Turnover: 1,422 (liquid)
- Leverage: 6.19% (moderate)
- Price change: +45.88% (bullish)
This call benefits from high gamma and IV, suitable for a rebound above $23. Projected payoff: $0.05 per contract (max profit if EWTX rallies to $23.05).

Aggressive bulls may consider EWTX20260116C23 into a bounce above $23.05, while bears should eye EWTX20260116P22 for a breakdown below $22.40.

Backtest Edgewise Stock Performance
The backtest of EWTX's performance after a -10% intraday plunge from 2022 to now shows a mixed result. The 3-Day win rate is 53.05%, the 10-Day win rate is 49.19%, and the 30-Day win rate is 53.05%. The maximum return during the backtest was 10.66% over 30 days, indicating that while EWTX had a decent chance of rebounding, the returns were relatively modest.

Act Now: EWTX’s Volatility Presents High-Risk, High-Reward Opportunities
EWTX’s 9.8% intraday drop has created a volatile but potentially lucrative setup. The stock’s proximity to its 200-day MA and lower Bollinger Band suggests a critical support test is imminent. With sector leader Cisco (CSCO) down 0.36%, broader Communication Equipment sector weakness remains a risk. Traders should prioritize EWTX20260116P22 for bearish bets and EWTX20260116C23 for a rebound. Watch for a breakdown below $22.13 (30D support) or a surge above $25.39 (intraday high) to confirm direction. Immediate action is warranted as options liquidity and volatility remain elevated.