National Grid Plunges 4.12% Amid Regulatory Fears and Bearish Technicals – What’s Next?

Summary
• National Grid (NGG) trades at $67.66, down 4.12% intraday
• Price breaks below 200-day moving average of $66.49
• Ofgem’s RIIO-ET3 draft determination triggers investor caution

Electric utilities face a volatile trading session as National Grid’s sharp decline reflects broader sector anxieties. With the stock trading 4% below its opening price of $67.63, the move aligns with regulatory scrutiny over energy infrastructure costs and a bearish technical setup. The 52-week range of $55.82–$74.82 suggests a critical test of long-term support.

Regulatory Overhang and Hydrogen Project Costs Weigh on Investor Sentiment
National Grid’s intraday selloff is driven by Ofgem’s RIIO-ET3 draft determination, which has triggered uncertainty over future capital allocation and cost recovery mechanisms. The company’s recent announcement of a 100% hydrogen-fueled generator at Northport Power Plant, while a strategic milestone, has raised concerns about regulatory approval timelines and operational costs. With the stock trading below its 30-day moving average of $71.46 and RSI at 46.1 (neutral but bearish), the move reflects profit-taking and positioning for potential regulatory headwinds.

Electric Utilities Sector Splits as NextEra Gains, NGG Falters
While NextEra Energy (NEE) edges up 0.08% as the sector leader, National Grid’s 4% decline highlights divergent investor sentiment. NextEra’s resilience stems from its renewable energy expansion and stable regulatory environment, contrasting with NGG’s exposure to UK regulatory uncertainty. The sector’s mixed performance underscores the importance of localized policy risks in utility valuations.

Bearish Setup: Short-Dated Puts and Covered Calls for Volatility Play
• MACD: -0.163 (bearish divergence), Signal Line: -0.129, Histogram: -0.034 (negative momentum)
• RSI: 46.1 (neutral but trending lower), Bollinger Bands: $69.96 (lower band), 200D MA: $66.49 (below current price)
• Support/Resistance: 30D: $70.52–$70.60, 200D: $70.68–$71.06

Technical indicators confirm a short-term bearish bias, with price near the lower Bollinger Band and MACD signaling weakening momentum. Two options stand out for volatility-driven strategies:

• NGG20250919P65 (Put):
- Strike: $65, Expiry: 2025-09-19, IV: 21.46% (moderate), Leverage: 193.34% (high gearing), Delta: -0.192 (moderate sensitivity), Gamma: 0.0846 (strong price sensitivity)
- Payoff Calculation: At a 5% downside (ST = $64.28), payoff = max(0, $65 - $64.28) = $0.72 per share. High leverage and gamma make this ideal for a breakdown below $69.96.

• NGG20250919C65 (Call):
- Strike: $65, Expiry: 2025-09-19, IV: 33.94% (elevated), Delta: 0.715 (high sensitivity), Theta: -0.040 (aggressive time decay)
- Payoff Calculation: At a 5% downside (ST = $64.28), payoff = max(0, $64.28 - $65) = $0. Aggressive bulls should consider NGG20250919P65 into a breakdown below $69.96, while cautious investors may use NGG20250919C65 for a short-term bounce trade.

Backtest National Grid Stock Performance

Regulatory Clarity and $69.96 Support to Dictate Next Move
National Grid’s 4% decline reflects regulatory uncertainty and a bearish technical setup, with the 200-day moving average ($66.49) and Bollinger Band support ($69.96) as critical near-term levels. While NextEra Energy’s 0.08% gain highlights sector resilience, NGG’s exposure to UK policy risks demands closer scrutiny. Investors should monitor Ofgem’s final RIIO-ET3 response and NGG’s hydrogen project progress. A breakdown below $69.96 would validate the bearish case, making NGG20250919P65 a high-leverage play. Watch for $69.96 support or regulatory updates by mid-September.