Keysight (KEYS) Plummets 5.45% Amid Earnings Optimism and Bearish Technicals: What’s Driving the Selloff?

Summary
• Keysight (KEYS) trades at $154.57, down 5.45% from its previous close of $163.48
• Intraday range spans $152.85 to $156.29, reflecting heightened volatility
• Earnings report highlights $1.72 non-GAAP EPS, exceeding guidance but triggering sharp selloff

Keysight Technologies (KEYS) is under pressure despite a strong earnings report, with technical indicators and options activity amplifying bearish sentiment. The stock’s 5.45% intraday decline has drawn attention to its short-term bearish pattern and elevated put-call activity, signaling a critical juncture for investors. With the sector leader TECL also down 3.8%, the broader market environment adds complexity to the stock’s near-term outlook.

Earnings Optimism Clashes with Technical Bearishness
Keysight’s third-quarter results showcased robust revenue growth of $1.35 billion and non-GAAP EPS of $1.72, surpassing guidance. However, the stock’s sharp intraday decline suggests market skepticism about the sustainability of these gains. The 52-week high of $186.20 remains a distant target, while the 52-week low of $121.43 looms as a psychological barrier. The bearish engulfing candlestick pattern and RSI at 44.66 indicate oversold conditions, but the MACD histogram’s negative divergence (-0.03) and Bollinger Bands’ compression near the lower band ($158.53) reinforce short-term bearish momentum. Investors are likely reassessing the stock’s valuation, with a dynamic PE of 37.39 and a 7% full-year revenue growth outlook failing to justify the current pullback.

Electronic Instruments Sector Weakness Amplifies KEYS’ Decline
The Electronic Equipment, Instruments, and Components sector is underperforming, with leveraged ETF TECL down 3.8%. KEYS’ 5.45% drop aligns with broader sector weakness, though its earnings outperformance contrasts with the sector’s bearish tone. The sector’s focus on capital-intensive R&D and macroeconomic headwinds—such as tariffs and 6G delays—weigh on investor sentiment. KEYS’ 11% year-over-year revenue growth in both segments (CSG and EISG) stands out, but the market’s reaction suggests skepticism about translating this into long-term margin expansion amid rising costs and geopolitical risks.

Bearish Positioning and Strategic Put Plays in a Volatile KEYS Market
• 200-day MA: $160.64 (above) • RSI: 44.66 (oversold) • MACD: 0.317 (bullish) vs. signal line 0.348 • Bollinger Bands: $158.53 (lower) to $170.31 (upper)

KEYS is in a short-term bearish trend with a bearish engulfing pattern, but long-term range-bound dynamics persist. Key support levels at $163.29 (30D) and $164.20 (200D) are critical for near-term direction. The 5.45% intraday drop has triggered heavy put buying, with implied volatility spiking to 30.44% for the September 19 $140 put (KEYS20250919P140).

Top Options Plays:
• KEYS20250919P140 (Put)
- Strike: $140 | Expiry: 2025-09-19 | IV: 30.44% | Delta: -0.121 | Theta: -0.017 | Gamma: 0.0147 | Turnover: $5,388
- IV (Implied Volatility): Elevated, reflecting bearish expectations
- Delta: Moderate sensitivity to price moves
- Theta: Low time decay, favorable for short-term holds
- Gamma: Slight sensitivity to delta changes
- Turnover: High liquidity ensures ease of entry/exit
- This put offers a 181.32% leverage ratio, ideal for aggressive bearish bets if KEYS breaks below $163.29. A 5% downside to $147.00 would yield a $140 put payoff of $7.00, offering 500% return on strike.

• KEYS20250919C160 (Call)
- Strike: $160 | Expiry: 2025-09-19 | IV: 24.77% | Delta: 0.3328 | Theta: -0.1331 | Gamma: 0.0327 | Turnover: $37,755
- IV: Reasonable, balancing risk and reward
- Delta: Moderate directional exposure
- Theta: High time decay, suitable for short-term rallies
- Gamma: Strong sensitivity to price swings
- Turnover: High liquidity for quick execution
- This call is a balanced play for a rebound above $163.29. A 5% upside to $162.30 would yield a $160 call payoff of $2.30, offering 144% return on strike. Ideal for volatility-driven bounces.

Action Insight: Aggressive bears target KEYS20250919P140 if $163.29 breaks; bulls consider KEYS20250919C160 on a rebound above $164.20.

Backtest Keysight Stock Performance
The backtest of KEYS ETF after an intraday plunge of -5% shows favorable performance, with win rates and returns indicating positive short-to-medium-term gains. The 3-Day win rate is 55.83%, the 10-Day win rate is 58.78%, and the 30-Day win rate is 58.78%, suggesting a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 3.72%, which occurred on day 59, further supporting the positive trend in the days following the initial drop.

KEYS at a Pivotal Crossroads: Sector Weakness and Technicals Demand Tactical Precision
KEYS’ 5.45% intraday drop reflects a clash between earnings optimism and bearish technicals, with the sector leader TECL (-3.8%) amplifying uncertainty. The stock’s short-term bearish engulfing pattern and oversold RSI suggest a potential rebound, but the 200-day MA at $160.64 and Bollinger Band compression near $158.53 remain critical. Investors should monitor the $163.29 support and $164.20 200D resistance for directional clues. The options market’s heavy put buying underscores bearish sentiment, but a rebound above $164.20 could reignite bullish momentum. Act now: Watch for a breakdown below $163.29 or a breakout above $164.20 to define the next move.