National Grid Plunges 2.67%, Is the Grid About to Face a Blackout of Investor Confidence?

Summary
• National Grid (NGG) plunges 2.67% to $70.225, a sharp drop from its 52-week high of $74.82.
• Pomerantz Law Firm investigates potential securities fraud over Heathrow Airport fire linked to National Grid's substation.
• Heathrow's legal threat and regulatory scrutiny amplify investor anxiety ahead of FERC's energy policy shifts.

Today’s selloff in National Grid (NGG) reflects a perfect storm of legal exposure, operational missteps, and sector-wide energy affordability pressures. With intraday volatility widening and a 22% spike in PJM capacity prices, the stock’s 2.67% drop underscores a market grappling with regulatory risk and infrastructure reliability concerns.

Legal Exposure and Operational Failures Spur Flight to Safety
The 2.67% selloff in National Grid (NGG) is directly tied to Pomerantz Law Firm’s investigation into alleged securities fraud and the NESO report on the 2025 Heathrow fire. The firm’s awareness of a 2018 substation fault—left unaddressed—has triggered lawsuits and reputational damage. Compounding this, Heathrow’s potential legal action and the broader energy sector’s regulatory scrutiny (e.g., FERC’s $16.4B Constellation-Calpine deal) amplify investor caution. The stock’s 2.67% decline mirrors sector peers like NextEra Energy (NEE), down 1.02%, but NGG’s direct legal exposure and operational missteps make its drop more acute.

Electric Utilities Sector Under Scrutiny as Grid Reliability Concerns Mount
Bearish Options and Technical Signals Point to Hedging Opportunities
• MACD (0.1496): Bullish divergence but weak signal line (0.0195).
• RSI (57.52): Neutral, avoiding overbought/oversold extremes.
• Bollinger Bands: Price near lower band (69.15), suggesting oversold conditions.
• 200D MA (65.81): Price above long-term support, but short-term pressure remains.

Key levels to watch: 71.87 (middle Bollinger Band) as resistance and 69.15 (lower Bollinger) as support. With RSI stabilizing and MACD showing fading momentum, a cautious short-term bearish bias is warranted. However, the 30-day MA (72.07) and 200D MA (65.81) suggest a potential rebound into Q3.

Top Options Contracts:
• NGG20250815P70
- Type: Put
- Strike: $70
- Expiration: 2025-08-15
- IV: 11.96% (low but stable)
- Lverage: 108.04% (high)
- Delta: -0.44 (moderate sensitivity)
- Theta: -0.0138 (slow time decay)
- Gamma: 0.2058 (strong sensitivity to price swings)
- Turnover: 3,640 (liquid)
- Why this put? High leverage and gamma make it ideal for a 5% downside scenario (targeting $66.71), with a projected payoff of $3.29 per contract.

• NGG20250919P70
- Type: Put
- Strike: $70
- Expiration: 2025-09-19
- IV: 15.18% (moderate)
- Lverage: 46.82% (high)
- Delta: -0.46 (strong sensitivity)
- Theta: -0.0121 (slow decay)
- Gamma: 0.0963 (modest sensitivity)
- Turnover: 3,000 (liquid)
- Why this put? Balances leverage and liquidity for a longer-term bearish bet, with a 5% downside payoff of $3.50. Theta decay is manageable given the Sept expiration.

Action: Aggressive short-side players should prioritize NGG20250815P70 for near-term bearish exposure. If NGG breaks below 70.18 (intraday low), consider rolling into the Sept 70 put for extended positioning.

Backtest National Grid Stock Performance
The backtest of NGG's performance after an intraday plunge of -3% shows favorable results. The 3-Day win rate is 55.33%, the 10-Day win rate is 57.90%, and the 30-Day win rate is 57.90%. This indicates that NGG tends to recover positively in the short term following a significant intraday decline. The maximum return during the backtest period was 2.19%, which occurred on day 59, suggesting that while there is some volatility, NGG can exhibit strong recovery gains.

Grid Vulnerability and Legal Risks Signal Short-Term Volatility
National Grid’s 2.67% drop highlights regulatory and operational risks that could linger into Q3, especially with Pomerantz’s investigation and Heathrow’s legal threat unresolved. While the stock remains above its 200D MA (65.81), the 52-week high ($74.82) is now a distant target. Investors should monitor 70.18 (intraday low) and 69.15 (Bollinger lower band) as critical support levels. Sector leader NextEra Energy (NEE, -1.02%) offers a safer alternative for long-term exposure, but NGG’s legal exposure makes it a high-risk, high-reward proposition. Watch for a breakdown below $69.15 or a surge in short interest—either could define NGG’s near-term trajectory.