First Horizon's 10.3% Plunge: Earnings Beat Overshadowed by M&A Fears and Efficiency Woes

Summary
• First Horizon (FHN) slumps 10.3% to $20.65, its worst intraday drop since May 2023
• Q3 earnings beat estimates, but efficiency ratio misses and M&A comments trigger selloff
• Sector peers like JPMorgan (JPM) rally 1.55% as banks sector shows resilience

First Horizon’s stock plunged over 10% in volatile trading after a mixed earnings report and management comments on M&A plans. Despite beating revenue and EPS estimates, concerns over rising costs and strategic uncertainty overshadowed the positives. The stock’s sharp decline contrasts with a resilient banking sector, where JPMorgan and peers reported strong results.

M&A Ambitions and Efficiency Concerns Overshadow Earnings Beat
First Horizon’s 10.3% drop stems from a combination of factors. While the bank reported a 7.5% year-on-year revenue increase and a $0.51 adjusted EPS beat, its efficiency ratio of 61.9%—a 258-basis-point miss—spooked investors. CEO Bryan Jordan’s comments about potential acquisitions further dented confidence, as analysts had speculated FHN might be a takeover target. The stock’s intraday low of $19.99 reflects a 12.3% discount to its 52-week high, signaling a shift in market sentiment toward risk aversion.

Banks Sector Resilient as JPMorgan Surpasses Expectations
The broader banking sector remains robust, with JPMorgan Chase (JPM) rising 1.55% on strong Q3 results. JPM’s $14.4 billion profit and 12% year-on-year revenue growth highlight the sector’s resilience amid economic uncertainty. While FHN’s selloff reflects idiosyncratic concerns, the sector’s performance underscores continued demand for banking services. However, FHN’s efficiency struggles and M&A ambiguity position it as an underperformer relative to peers.

Options Playbook: Capitalizing on Volatility with FHN20251121P21 and FHN20251121P23
• MACD: 0.094 (bullish divergence), Signal Line: 0.111, Histogram: -0.017 (bearish crossover)
• RSI: 52.9 (neutral), Bollinger Bands: $22.16–$23.39 (current price near lower band)
• 200D MA: $20.74 (just below current price), 30D MA: $22.69 (resistance ahead)

First Horizon’s technicals suggest a short-term bearish bias, with key support at $21.84 (200D MA) and resistance at $22.69 (30D MA). The stock’s 10.3% drop has created high-conviction options opportunities. Two top picks from the options chain are:

• FHN20251121P21 (Put, $21 strike, Nov 21 expiry):
- IV: 43.73% (mid-range volatility), Leverage: 16.21%, Delta: -0.4995 (moderate sensitivity), Theta: -0.0101 (moderate time decay), Gamma: 0.1359 (high sensitivity to price swings), Turnover: 288,997 (liquid)
- This put option offers a 184.44% price change potential if FHN breaks below $21. A 5% downside to $19.61 would yield a $1.39 payoff (K - ST = $21 - $19.61).

• FHN20251121P23 (Put, $23 strike, Nov 21 expiry):
- IV: 53.84% (elevated volatility), Leverage: 7.26%, Delta: -0.6881 (high sensitivity), Theta: -0.0084 (low time decay), Gamma: 0.0976 (moderate sensitivity), Turnover: 359,909 (liquid)
- This put thrives on a sharp drop, with a 150.88% price surge potential. A 5% downside to $19.61 would generate a $3.39 payoff (K - ST = $23 - $19.61).

Aggressive bears should prioritize FHN20251121P21 for its balance of leverage and liquidity. If FHN breaks below $21, this contract could outperform. For a more directional bet, FHN20251121P23 offers high reward if the selloff accelerates.

Backtest First Horizon Stock Performance
Hi! Here’s what has happened so far and why the back-test did not complete.1. Price data – success • I have already downloaded daily price history for FHN from 2022-01-03 to 2025-10-15 (file FHN_OHLC_2022_2025_v2.json).2. Event screening – ambiguous • I first screened on “-10 % close-to-close drop”; the script produced an (apparently empty) date list. • Because the list contained no events, the event-back-test engine threw an internal error (empty input → statistics list empty).3. Your requirement is “-10 % intraday plunge (low vs previous close)”. • The condensed preview of the file I pulled does not expose the daily “low” field, only technical indicators. • If the underlying raw OHLC prices (especially the ‘low’) are not accessible, we cannot detect “intraday low −10 %” accurately.What we can do nextA) Try to fetch raw OHLC data (including the “low” column) and re-run the screen. – If the data source returns the low price, I’ll run the proper intraday filter and finish the back-test.B) If the data source really cannot supply intraday lows, we can: 1. Switch to the close-to-close definition (still useful for most post-crash analyses), or 2. Relax the plunge threshold (e.g. -8 %) to make sure we have enough events to analyse, or 3. Stop here.Please let me know which path you prefer (A, B1, B2, or B3). Once I have that confirmation, I’ll execute the appropriate steps and deliver the final performance report with visual output.

Act Now: FHN's Volatility Presents Strategic Entry Points
First Horizon’s 10.3% plunge has created a high-conviction short-term trading opportunity. The stock’s technicals and options chain suggest a bearish bias, with key support at $21.84 and resistance at $22.69. Investors should monitor the 200-day moving average ($20.74) as a critical level; a break below could trigger further selling. Meanwhile, JPMorgan’s 1.55% gain highlights the sector’s resilience, but FHN’s idiosyncratic risks remain elevated. Aggressive traders may consider FHN20251121P21 for a bearish play, while long-term holders should wait for a rebound above $22.69 before re-entering.