HPQ Plummets 4.75% Amid Sector-Wide Tech Turmoil: Is This the Start of a Broader Downturn?

Summary
• HP Inc. (HPQ) trades at $23.27, down 4.75% from its previous close of $24.43
• Sector leader Dell Technologies (DELL) also declines 4.44%, signaling broader hardware sector weakness
• Options chain reveals high leverage ratios and volatility spikes on put options
• Technical indicators suggest short-term bearish momentum amid long-term consolidation

HPQ’s sharp intraday decline has drawn attention as the stock trades near its 52-week low of $21.21. The move coincides with sector-wide pressure, driven by DRAM shortages, HDD price surges, and earnings disappointments. With implied volatility spiking and key support levels in play, traders are recalibrating positions ahead of critical technical thresholds.

Warren Buffett’s Exit and Earnings Jitters Trigger Flight
HPQ’s selloff is directly tied to Warren Buffett’s Berkshire Hathaway selling $158 million of HP shares in three days, reducing its stake below 12%. This follows HP’s Q3 earnings guidance cut due to soft PC and printer demand, compounded by insider selling of $82 million in shares. The move has triggered a flight to safety, with investors prioritizing liquidity over long-term value. Analysts note Buffett’s exit signals a lack of conviction in HP’s near-term recovery amid sector-wide margin pressures.

Tech Hardware Sector Reels as DELL and HPQ Sink in Sync
The Technology Hardware, Storage & Peripherals sector is under pressure, with Dell Technologies (DELL) down 4.44% alongside HPQ. Both stocks face headwinds from DRAM shortages and HDD price surges highlighted in sector news. While DELL’s decline mirrors HPQ’s, HP’s lower price-to-earnings ratio (8.45) suggests it may attract value hunters if the selloff corrects. However, the synchronized drop underscores systemic challenges in hardware margins.

Bearish Options Play and ETF Positioning in a Volatile Environment
• 200-day MA: 26.29 (below) • RSI: 54.51 (neutral) • MACD: -0.175 (bearish) • Bollinger Bands: 22.79–26.46 (current price at 23.27 near lower band)

HPQ’s technicals suggest short-term bearish momentum, with the 200-day MA acting as a key resistance. The RSI hovering near 54.51 indicates neutral territory, but the MACD’s bearish crossover and Bollinger Band positioning favor a defensive stance. For leveraged exposure, consider the XLEF ETF (XLEF) if available, though no direct leveraged ETFs are listed for HPQ.

Top Options Contracts:
• HPQ20251226P23 (Put): Strike $23, Expiry 12/26, IV 27.48%, Leverage 101.76%, Delta -0.3358, Theta -0.0245, Gamma 0.3608, Turnover 40,817
• HPQ20251226P23.5 (Put): Strike $23.5, Expiry 12/26, IV 4.78%, Leverage 180.04%, Delta -0.7097, Theta -0.0136, Gamma 1.9438, Turnover 0

HPQ20251226P23 offers a balanced risk-reward profile with moderate delta (-0.3358) and high gamma (0.3608), ideal for a 5% downside scenario (targeting $22.11). HPQ20251226P23.5 has extreme gamma (1.9438) but low liquidity (zero turnover), making it unsuitable for most traders. For a 5% move to $22.11, the put payoff would be $0.89 per contract, offering 38% return on premium paid. Aggressive bears may consider HPQ20251226P23 into a breakdown below $22.79 (lower Bollinger Band).

Backtest HP Stock Performance
The backtest of Hewlett Packard Enterprise (HPQ) after an intraday plunge of -5% from 2022 to the present shows favorable short-to-medium-term performance. The 3-Day win rate is 55.28%, the 10-Day win rate is 53.62%, and the 30-Day win rate is 55.49%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 0.38%, recorded on day 40, suggesting that while the returns were generally modest, there were opportunities for gains in the aftermath of the intraday drop.

Act Now: HPQ’s 22.79 Support is Critical for Near-Term Direction
HPQ’s selloff is a microcosm of broader hardware sector fragility, with Buffett’s exit and earnings misses amplifying risk-off sentiment. The 22.79 support level (lower Bollinger Band) is critical; a break below could trigger a test of the 52-week low at $21.21. DELL’s -4.44% decline reinforces sector-wide weakness. Traders should monitor the 200-day MA at $26.29 as a potential reversal point. For now, short-term bearish positioning via the HPQ20251226P23 put option offers a high-gamma play on a 5% downside scenario. Watch for a breakdown below $22.79 or a rebound above $24.63 (middle Bollinger Band) to define the next phase.