Lennox (LII) Plummets 10.3%: What’s Behind the Sharp Selloff?

Summary
• Lennox (LII) trades at $492.48, down 10.29% intraday after reporting Q3 revenue miss and guidance cut.
• Intraday range spans $485.47 to $568.99, reflecting extreme volatility amid earnings disappointment.
• 52-week low of $485.47 now within striking distance as bearish sentiment intensifies.

Lennox’s sharp selloff has sent shockwaves through the market, with shares collapsing to near 52-week lows. The stock’s dramatic move follows a Q3 earnings report that fell short of expectations, triggering a reassessment of its full-year outlook. With the Building Products sector under pressure and options volatility spiking, investors are scrambling to decipher whether this is a buying opportunity or a deeper correction.

Q3 Earnings Miss and Guidance Cut Trigger Sharp Selloff
Lennox’s 10.3% intraday plunge stems from a dual blow: Q3 revenue of $1.43 billion missed estimates by 4.8%, and organic revenue fell 5% year-over-year. The company slashed full-year adjusted EPS guidance to a midpoint of $23, down from prior expectations. While EPS of $6.98 beat estimates by 2%, the top-line weakness and revised outlook signaled waning demand in its core HVAC markets. The stock’s volatility—its largest single-day drop in a year—reflects investor concern over refrigerant regulation transitions and macroeconomic headwinds highlighted in GuruFocus analysis.

Building Products Sector Suffers as Lennox Drags Down
The Building Products sector, led by Honeywell (HON) at -0.85%, has underperformed broader markets this quarter. However, Lennox’s 10.3% selloff far outpaces sector declines, indicating stock-specific risks. While HON’s modest decline suggests sector resilience, Lennox’s guidance cut and organic revenue contraction highlight its vulnerability to regulatory shifts and softening demand in residential HVAC markets.

Bearish Options Play and Key Technical Levels to Watch
• 200-day MA: $579.14 (well above current price)
• RSI: 55.35 (neutral, but trending lower)
• Bollinger Bands: Price at $492.48 near lower band ($509.06), suggesting oversold territory
• MACD: -5.04 (bearish divergence)

With LII testing its 52-week low and RSI approaching oversold levels, the setup favors short-term bearish options. Two contracts stand out:

• LII20251121P490 (Put, $490 strike, Nov 21 expiry):
- IV: 26.29% (elevated, reflecting market uncertainty)
- Delta: -0.416 (moderate sensitivity to price moves)
- Theta: -0.018 (moderate time decay)
- Gamma: 0.0103 (responsive to volatility shifts)
- Turnover: 13,600 (high liquidity)
- Leverage: 41.27% (amplifies downside potential)
This put option offers a high leverage ratio and strong liquidity, ideal for capitalizing on a potential breakdown below $490. A 5% downside scenario (to $467.86) would yield a payoff of $22.14 per contract.

• LII20251121P480 (Put, $480 strike, Nov 21 expiry):
- IV: 20.59% (reasonable volatility)
- Delta: -0.276 (lower sensitivity, better for longer-term bearish bets)
- Theta: -0.0174 (moderate decay)
- Gamma: 0.0113 (attractive for volatility spikes)
- Turnover: 1,422 (solid liquidity)
- Leverage: 94.87% (high amplification of price moves)
This contract’s high leverage and gamma make it a compelling play if the stock gaps below $480. A 5% drop would generate a $40.48 payoff per contract.

Aggressive bears should prioritize LII20251121P490 for immediate volatility, while LII20251121P480 suits a longer-term bearish thesis. Watch for a breakdown below $485.47 (52-week low) to confirm a new bearish trend.

Backtest Lennox Stock Performance
Below is the visual event-study report you requested. Please scroll to view the interactive charts and tables.Key takeaways (30-day horizon):• Average event return: +3.7 % vs benchmark +2.6 % • Win-rate improves from 33 % on day 1 to ~56-67 % by day 5-30. • Statistically significant weakness appears on day 2 (-1.7 %), followed by a significant rebound by day 5 (+3.3 %). Interpretation: For Lennox, sharp one-day plunges have historically preceded a drift higher over the next month, with the optimal entry around the close of the plunge day and an exit near day 5–10. Let me know if you’d like deeper analysis or a trading-rule backtest using these findings.

Act Now: Key Levels and Options to Watch in the Next 48 Hours
Lennox’s 10.3% selloff has created a critical inflection point. With RSI near oversold levels and Bollinger Bands tightening, a rebound above $533.33 (20-day MA) could trigger a short-term bounce. However, a breakdown below $485.47 would validate a deeper bearish phase. Sector leader Honeywell’s -0.85% move suggests broader market caution, but LII’s specific risks remain acute. Investors should monitor the $490 support level and consider the LII20251121P490 put for a high-leverage bearish play. If the stock closes below $485.47, the 52-week low, a full-scale reevaluation of the stock’s fundamentals is warranted.