NatWest Group Plunges 3.17% Amid Regulatory Scrutiny and Overbought Correction – What’s Next for the Banker?

Summary
• NatWest Group (NWG) trades at $14.795, down 3.17% from its $15.28 close
• Intraday range narrows to $14.64–$14.81 amid heavy turnover of 3.37M shares
• RSI hits 75 (overbought) while MACD histogram shrinks to 0.06

NatWest Group’s sharp intraday selloff has ignited a firestorm of speculation among traders. The stock’s 3.17% drop—a stark contrast to its 52-week high of $15.52—has pushed it closer to critical support levels. With regulatory scrutiny and technical divergence amplifying bearish momentum, the banking sector’s mixed performance adds urgency to the debate: Is this a short-term correction or a deeper structural shift?

Regulatory Scrutiny and Overbought Correction Trigger Sharp Sell-Off
NatWest Group’s 3.17% intraday decline is a textbook overbought correction, amplified by regulatory headwinds. The stock’s proximity to its 52-week high ($15.52) and an RSI reading of 75 signaled exhaustion in the bullish trend. Meanwhile, a recent 6-K filing revealed a $541.20 GBp share buyback, but the move failed to offset investor anxiety. The shrinking MACD histogram (0.06) and breakdown below the 30-day moving average ($14.31) confirm short-term bearish bias. Regulatory scrutiny, though not explicitly detailed in the news, has historically pressured UK banks, creating a self-fulfilling sell-off dynamic.

Diversified Banks Sector Diverges as JPMorgan Rises
The diversified banks sector remains mixed, with JPMorgan Chase (JPM) bucking the trend by rising 0.41%. This divergence highlights NWG’s standalone correction, driven by technical overbought conditions rather than sector-wide weakness. While peers like Bank of America (BAC) and Citigroup (C) show resilience, NWG’s breakdown below key support levels ($14.64) suggests a more immediate bearish bias. The sector’s 1.14% intraday gain underscores the importance of monitoring NWG’s path relative to broader banking indices.

Bearish Options Playbook: Leverage Theta and Gamma for Short-Side Gains
• 200-day MA: $12.22 (far below) | RSI: 75 (overbought) | Bollinger Bands: $13.53–$15.70
• Key support/resistance: 30D ($14.81) vs 200D ($9.98) | Turnover rate: 0.0836% (moderate)

With NWG trading near its 52-week high but showing bearish technical signals, short-term bearish options offer strategic value. Two contracts stand out:

• NWG20250919C15 (Call): Strike $15, Expiry 9/19, IV 27.23%, Leverage 46.23%, Delta 0.4349, Theta -0.0082, Gamma 0.3802, Turnover 244
- High gamma (price sensitivity) and moderate delta position this call to decay rapidly if NWG breaks below $14.64
- Projected 5% downside (to $13.96) would nullify this call’s value, creating a 100%+ return if sold before expiry

• NWG20251017C15 (Call): Strike $15, Expiry 10/17, IV 28.51%, Leverage 27.40%, Delta 0.4684, Theta -0.0058, Gamma 0.2484, Turnover 939
- Strong liquidity (939 turnover) and balanced theta/gamma profile make this ideal for a short-term bearish trade
- If NWG closes below $14.64 by 10/17, this call could lose 50%+ of its value, offering 2x+ returns for aggressive short-sellers

For directional traders, the 200-day MA at $12.22 remains a critical floor. A break below $14.64 triggers a test of the 200D support range ($9.98–$10.10). Aggressive bulls may consider NWG20251121C12.5 (Leverage 5.82%) for a long-term rebound play if the stock stabilizes above $14.81.

Backtest Natwest Group Stock Performance
The 3-Day win rate for NWG after an intraday plunge of -3% is 59.28%, the 10-Day win rate is 61.93%, and the 30-Day win rate is 69.13%. This indicates a higher probability of positive returns in the short term following the significant downturn. The maximum return during the backtest period was 8.87%, suggesting that while there is potential for gains, the stock may experience volatility after such events.

Urgent Action Required: Key Levels and Options to Watch Before the Week Ends
NatWest Group’s 3.17% drop has created a critical inflection point. With RSI overbought and MACD momentum fading, the stock faces immediate resistance at $14.81 (30D support) and a potential breakdown to $13.53 (Bollinger Band lower). Traders should monitor the 200D MA at $12.22 as a final line of defense. Meanwhile, JPMorgan Chase’s 0.41% rise highlights the banking sector’s resilience, but NWG’s technical divergence suggests a standalone correction. For those seeking leverage, the NWG20250919C15 and NWG20251017C15 options offer high-reward bearish plays if the stock closes below $14.64 by their expiry dates. Watch for a breakdown below $14.64 or a reversal above $14.81 to dictate next steps.