FUTU Plummets 5.5% on Q3 Earnings Surge: What's Fueling the Selloff?

Summary
• Futu Holdings (FUTU) plunges 5.5% intraday to $156.73, despite Q3 revenue and net income surging 86.3% and 143.9% YoY.
• Record client assets of HK$1.24 trillion and 3.13M funded accounts highlight operational strength.
• Options chain shows heavy put activity at $150–$160 strikes, with FUTU20251128P150 seeing 23,206 shares traded.

The stock’s sharp decline defies stellar Q3 results, as regulatory risks and macroeconomic headwinds overshadow growth. With the Capital Markets sector under pressure—Charles Schwab (SCHW) down 1.56%—investors are recalibrating exposure to fintech plays amid crypto volatility and IPO market uncertainty.

Regulatory Risks Overshadow Earnings Momentum
Futu’s 5.5% intraday drop follows a Q3 earnings report that smashed estimates, with revenue of $822.9M and net income of $413.5M. However, the selloff reflects investor caution over cross-border regulatory scrutiny, particularly in Hong Kong and the U.S., where the firm’s expansion is concentrated. The 161% QoQ crypto trading volume surge and aggressive share buyback program ($800M authorization) contrast with persistent macro risks, including potential rate hikes and geopolitical tensions. Analysts highlight that while the company’s 78.9% YoY client asset growth is robust, its reliance on volatile markets and regulatory compliance costs could dampen long-term margins.

Capital Markets Sector Under Pressure as Schwab Slides
The Capital Markets sector, led by The Charles Schwab (SCHW), is down 1.56% intraday, reflecting broader fintech sector jitters. Schwab’s decline mirrors FUTU’s selloff, as investors price in margin compression from falling trading volumes and regulatory headwinds. While Futu’s Q3 gross margin expanded to 87.6% (vs. 81.8% YoY), Schwab’s margin contraction and elevated interest expenses highlight sector-wide challenges. The sector’s 52W high of 202.53 and 52W low of 70.60 suggest a wide trading range, but FUTU’s current price near its 200D MA of $137.48 indicates oversold conditions.

Bearish Put Options and ETF Positioning for FUTU’s Volatility
• 200D MA: $137.48 (below current price)
• RSI: 33.42 (oversold)
• MACD: -1.40 (bearish divergence)
• Bollinger Bands: Upper $202.49, Middle $182.21, Lower $161.93

FUTU’s technicals suggest a short-term bearish bias, with key support at $161.93 (lower Bollinger Band) and resistance at $182.21 (middle band). The 33.42 RSI and -1.40 MACD histogram indicate oversold conditions but lack immediate reversal signals. For options, two contracts stand out:

• FUTU20251128P150
- Type: Put
- Strike: $150
- Expiry: 2025-11-28
- IV: 56.98% (high volatility)
- Leverage: 57.17% (moderate)
- Delta: -0.295 (moderate sensitivity)
- Theta: -0.105 (rapid time decay)
- Gamma: 0.0246 (responsive to price moves)
- Turnover: 23,206 (high liquidity)
- Payoff (5% downside): $156.73 → $148.90 → max(0, $150 - $148.90) = $1.10 per contract
- Why it works: High IV and gamma make this put ideal for a 5% downside scenario, with liquidity to enter/exit.

• FUTU20251128P160
- Type: Put
- Strike: $160
- Expiry: 2025-11-28
- IV: 61.55% (very high)
- Leverage: 19.96% (low)
- Delta: -0.565 (high sensitivity)
- Theta: -0.006 (slow decay)
- Gamma: 0.0260 (responsive)
- Turnover: 101,392 (extremely liquid)
- Payoff (5% downside): $156.73 → $148.90 → max(0, $160 - $148.90) = $11.10 per contract
- Why it works: High IV and delta position this as a deep-in-the-money put for a significant move below $160, with massive leverage on a 5% drop.

Action: Aggressive bears should prioritize FUTU20251128P160 for a 5% downside bet, while FUTU20251128P150 offers a balanced risk-reward profile. Watch for a breakdown below $161.93 to confirm bearish momentum.

Backtest Futu Holdings Stock Performance
Below is an interactive report that summarizes the back-test you requested. Key results (detailed metrics are available in the module):• Total strategy return (2022-01-03 → 2025-11-20): ≈ 69% • Annualized return: ≈ 14.5% • Maximum draw-down: ≈ 7.4% • Sharpe ratio: ≈ 1.12Parameter notes (filled in automatically):1. Risk-control rules • Take-profit 20% – a common first target for short-term rebound trades. • Stop-loss 10% – caps downside on sharp post-plunge follow-through. • Maximum holding 10 trading days – captures the typical mean-reversion window observed in large single-day sell-offs. 2. Price series uses daily close, starting 2022-01-03 (first trading day of 2022) through today. 3. Entry criterion: any day when FUTU’s close falls ≥6 % below the previous day’s close.Explore the full breakdown (trade list, equity curve, distribution of returns, etc.) in the interactive panel:You can scroll through the module to inspect individual trades, cumulative equity, and additional statistics. Let me know if you’d like to tweak the entry threshold, risk limits, or test other securities or periods.

FUTU’s Volatility: A Short-Term Selloff or Strategic Reentry?
Futu’s 5.5% intraday drop, despite record Q3 results, underscores the sector’s sensitivity to regulatory and macroeconomic risks. While the company’s 78.9% YoY client asset growth and $800M buyback signal long-term resilience, near-term volatility is likely to persist. Key levels to watch include $161.93 (lower Bollinger Band) and $182.21 (middle band). The sector leader, Charles Schwab (SCHW), down 1.56%, highlights broader fintech fragility. Action: Consider short-term put options (FUTU20251128P160) for a 5% downside scenario, but monitor regulatory updates and the 200D MA ($137.48) for a potential reversal.