Flex Plunges 5.56%—What’s Fueling This Sudden Sell-Off?

Summary
• Flex’s intraday price fell to $48.95, its lowest since 2023, amid heavy volume of 5.4 million shares
• The stock opened at $50.32, but has since slid below its 52-week low of $25.11, trading at $50.81 as of 18:16
• Sector news highlights LG’s partnership with Furiosa for AI appliances, yet Flex faces sharp downside pressure

Flex’s dramatic intraday selloff has captured attention as the stock trades nearly 5.6% below its previous close. The sell-off comes amid a backdrop of sector-level AI hardware developments and mixed market sentiment, with the stock oscillating between key support/resistance levels. The 52-week high of $53.97 now feels distant as traders grapple with the cause of this sharp reversal.

Sector-Wide Volatility Amid AI Hardware Developments
Flex’s sharp decline aligns with broader sector uncertainty despite positive news in the AI hardware space. LG’s announcement to ship AI appliances using Furiosa’s chips signals growing demand for advanced semiconductors, yet Flex’s price action suggests investors are recalibrating expectations. The stock’s intraday range of $51.70 to $48.95 reflects aggressive profit-taking and short-term bearish sentiment, possibly driven by profit-liquidation after recent gains or concerns over competitive positioning in the AI supply chain. The absence of company-specific news further points to sector-wide profit-taking or macroeconomic factors influencing the move.

Electronic Equipment Sector Mixed as JBL Trails
The Electronic Equipment sector remains under pressure, with JBL (Jabil) declining 4.08% intraday. Flex’s 5.56% drop outpaces even its sector peers, highlighting uneven performance within the group. While AI-driven hardware innovation—such as LG’s Furiosa partnership—points to long-term growth, near-term volatility reflects uncertainty over execution risks, margin pressures, and valuation adjustments. Flex’s sharp correction suggests investors are prioritizing short-term caution over sector-level optimism.

Options Playbook: Capitalizing on Short-Term Volatility
• 200-day average: 39.50 (well below current price)
• RSI: 71.61 (overbought territory, suggesting potential reversal)
• MACD: 2.09 (bullish), but histogram turning negative
• Bollinger Bands: Price at 50.81, near lower band (48.62), indicating oversold risk

Flex’s technical profile suggests a short-term bearish bias, with the 50-day MA at 49.31 acting as a critical near-term support. The RSI’s overbought reading and MACD’s diverging histogram hint at a potential pullback. Traders should monitor the $48.95 intraday low as a breakdown trigger, with the 200-day MA at 39.50 offering a long-term floor. While no leveraged ETF data is available, the sector’s mixed performance underscores the need for caution.

Top Option 1: FLEX20250815P45 (Put, Strike 45, Expiry 2025-08-15)
• IV: 40.18% (mid-range volatility)
• Leverage Ratio: 203.36% (high potential return)
• Delta: -0.0989 (moderate sensitivity)
• Theta: -0.0093 (moderate time decay)
• Gamma: 0.0339 (responsive to price movement)
• Turnover: 13,136 (high liquidity)

This put option offers strong leverage for a 5% downside scenario. If Flex breaks below $48.95, the payoff from this strike could yield significant returns. The moderate delta ensures it remains sensitive to price drops without excessive premium erosion.

Top Option 2: FLEX20250815P46 (Put, Strike 46, Expiry 2025-08-15)
• IV: 41.18% (slightly elevated)
• Leverage Ratio: 121.05%
• Delta: -0.1477 (balanced sensitivity)
• Theta: -0.0112 (higher time decay)
• Gamma: 0.0439 (high responsiveness)
• Turnover: 16,857 (very liquid)

This contract balances leverage and liquidity, ideal for a bearish setup. The higher gamma ensures it gains value rapidly if Flex accelerates lower, while the moderate theta allows for a 15-day window to act. Both options align with a short-term bearish bias, with FLEX20250815P45 offering the highest potential return under a 5% downside projection.

Action Insight: Aggressive bears should target FLEX20250815P45 as Flex tests $48.95. A breakdown below this level could validate a deeper correction.

Backtest Flex Stock Performance
The 3-day win rate for FLEX after an intraday plunge of -6% is 60.30%, the 10-day win rate is 61.47%, and the 30-day win rate is 69.68%. The maximum return during the backtest was 11.31% over 30 days, indicating that while there is some volatility, FLEX tends to recover and even exceed its pre-plunge levels in the medium to long term.

Short-Term Volatility Expected—Watch for Breakdown Below $48.95
Flex’s selloff reflects a mix of sector-wide profit-taking and short-term bearish momentum, with technical indicators suggesting a potential pullback. The key levels to monitor are the $48.95 intraday low and the 50-day MA at 49.31. A sustained break below $48.95 would signal a shift to a bearish bias, with the 200-day MA at 39.50 offering a long-term floor. Meanwhile, sector leader JBL’s -4.08% intraday drop highlights broader industry uncertainty. Investors should stay alert to the $48.95 breakdown and consider short-term options like FLEX20250815P45 to capitalize on near-term volatility.