Novo Nordisk Plummets 3.2% Amid Legal Storm and Market Volatility – What’s Next for NVO?

Summary
• Novo Nordisk (NVO) plunges 3.2% to $57.015, its lowest since late 2024
• Lawsuit from Strive Specialties alleges anticompetitive practices in GLP-1 drug market
• 52-week range of $43.08–$93.80 highlights extreme volatility
• Options chain shows heavy put buying at $52–$58 strikes as bearish sentiment intensifies

Novo Nordisk faces a perfect storm of legal headwinds and market skepticism as shares tumble intraday. The stock’s sharp decline follows a Texas lawsuit alleging anticompetitive behavior in the GLP-1 weight-loss drug market, compounding near-term risks from patent expirations and pricing pressures. With the stock trading near its 52-week low and technical indicators flashing caution, investors must navigate a complex mix of regulatory, competitive, and valuation challenges.

Legal Allegations Trigger Sharp Selloff in Novo Nordisk Shares
The 3.2% intraday drop in NVO stems directly from a federal lawsuit filed by Strive Specialties, a compounding pharmacy, accusing Novo Nordisk and Eli Lilly of monopolizing the GLP-1 weight-loss drug market. The suit alleges the companies blocked access to lower-cost compounded alternatives like Ozempic and Wegovy, leveraging exclusive deals with telehealth platforms and payment processors. Novo Nordisk has dismissed the claims as 'without merit,' but the legal uncertainty has spooked investors. This comes amid broader market concerns over pricing pressures, patent expirations in key markets, and the looming launch of Eli Lilly’s Ventyx, which could intensify competition in the obesity drug space.

Drug Manufacturers - General Sector Mixed as NVO Struggles
The broader drug manufacturers sector showed mixed performance, with AbbVie securing a $100B U.S. pricing deal and Roche advancing ADC partnerships. However, Novo Nordisk’s decline diverged sharply from sector trends, driven by its unique exposure to GLP-1 market dynamics. While peers like Eli Lilly (LLY) also faced legal and competitive pressures, LLY’s shares fell 4.0% on the same day, reflecting shared risks in the obesity drug space. Novo’s legal troubles and near-term revenue headwinds, however, make its selloff more pronounced compared to sector peers.

Bearish Options and ETFs Highlight NVO’s Volatility Play
• 200-day average: $59.10 (above current price)
• RSI: 79.06 (overbought)
• MACD: 2.64 (bullish divergence)
• Bollinger Bands: $44.83–$61.72 (current price near lower band)
• Support/Resistance: 50.14–50.41 (30D support), 47.86–48.58 (200D support)

NVO’s technical profile suggests a bearish reversal after a sharp decline from overbought territory. The stock is testing key support levels near $50, with the 200-day average acting as a critical resistance. The Defiance Daily Target 2X Long NVO ETF (NVOX), down 6.29%, amplifies exposure to this volatility. For options, two contracts stand out:

• NVO20260123P52 (Put, $52 strike, 1/23 expiration):
- IV: 40.78% (moderate)
- Leverage: 474.67% (high)
- Delta: -0.072 (moderate sensitivity)
- Theta: -0.021 (moderate time decay)
- Gamma: 0.0377 (modest price sensitivity)
- Turnover: $118,058 (high liquidity)
- Payoff at 5% downside: $2.16 (max(0, 54.16 - 52))
- Why it works: High leverage and liquidity make this a strong short-term bearish play as NVO tests $52 support.

• NVO20260123P56 (Put, $56 strike, 1/23 expiration):
- IV: 36.21% (reasonable)
- Leverage: 67.01% (moderate)
- Delta: -0.369 (strong sensitivity)
- Theta: -0.0328 (high time decay)
- Gamma: 0.1164 (high price sensitivity)
- Turnover: $115,199 (high liquidity)
- Payoff at 5% downside: $1.90 (max(0, 54.16 - 56))
- Why it works: Strong delta and gamma position this for rapid gains if NVO breaks below $56, with high turnover ensuring ease of entry.

Aggressive bears should prioritize NVO20260123P52 for liquidity and leverage, while NVO20260123P56 offers higher gamma for a sharper move.

Backtest Novo Nordisk Stock Performance
The backtest of Novo Nordisk's (NVO) performance after an intraday plunge of -3% from 2022 to the present shows favorable short-to-medium-term gains. The 3-Day win rate is 53.06%, the 10-Day win rate is 57.55%, and the 30-Day win rate is 57.55%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 1.89%, achieved on day 57, suggesting that NVO has the potential to recover and even exceed its pre-plunge levels.

NVO at Crossroads: Legal Risks and Strategic Options – Immediate Steps for Investors
Novo Nordisk’s 3.2% decline underscores the fragility of its current valuation amid legal and competitive headwinds. While the stock’s technicals suggest a potential rebound from key support levels, the lawsuit and pricing pressures cast a long shadow. Investors should monitor the $50.14 support and the outcome of the Strive Specialties litigation, which could trigger further volatility. The sector leader, Eli Lilly (LLY, -4.0%), highlights shared risks in the GLP-1 space. Act now: Buy NVO20260123P52 for a bearish bet or watch for a rebound above $56.50 to re-enter long positions.