Ouster Plummets 9.7%: Short Squeeze Fears and Technical Deterioration Ignite Volatility

Summary
• Ouster (OUST) crashes 9.7% to $21.20, erasing $2.28 from its value in under 2.5 hours
• Short interest ratio at 1.9 days to cover, with 10.53% of float sold short
• 52-week range of $6.34–$41.65 highlights extreme volatility amid sector uncertainty

Ouster’s intraday freefall has ignited a firestorm of speculation, with traders scrambling to parse the implications of its 9.7% drop. The stock’s collapse from $23.75 to $20.80—a $3 range—has triggered short-covering frenzy and bearish momentum signals. With short interest at 5.51 million shares and a 3.46% turnover rate, the market is bracing for a potential short squeeze or further capitulation.

Short Interest Dynamics and Bearish Technicals Drive Sharp Decline
Ouster’s 9.7% intraday plunge is driven by a confluence of short-seller activity and deteriorating technical indicators. The stock’s short interest ratio of 1.9 days to cover suggests a manageable but sensitive short float, yet the 8.3% decline in short interest since October 15, 2025, indicates recent bearish positioning. Compounding this, the RSI of 32.23 and MACD histogram of -0.3658 signal oversold conditions and bearish momentum. The 52-week low of $6.34 looms as a psychological barrier, amplifying risk-off sentiment.

Bearish Playbook: Puts and Put Spreads in a Volatile Regime
• 200-day MA: $23.25 (below current price) • RSI: 32.23 (oversold) • MACD: 0.0119 (bearish) • Bollinger Bands: $21.98–$29.08 (current price near lower band)

Ouster’s technicals paint a bearish near-term picture, with the 200-day MA at $23.25 acting as a critical support level. The RSI at 32.23 suggests oversold conditions, but the MACD histogram’s -0.3658 and declining 30-day MA of $24.34 indicate momentum is firmly bearish. Traders should focus on short-dated puts and put spreads, leveraging the stock’s high implied volatility and liquidity in the options chain.

Top Option 1: OUST20260206P20
• Code: OUST20260206P20 • Type: Put • Strike: $20 • Expiry: 2026-02-06 • IV: 89.21% • Leverage: 225% • Delta: -0.331 • Theta: -0.0226 • Gamma: 0.1308 • Turnover: 513
IV at 89.21% suggests elevated volatility expectations; delta of -0.331 balances sensitivity to price moves. A 5% downside to $20.14 would yield a payoff of $0.14 per contract, or 0.7% of current price. High gamma (0.1308) ensures responsiveness to further declines.

Top Option 2: OUST20260213P20
• Code: OUST20260213P20 • Type: Put • Strike: $20 • Expiry: 2026-02-13 • IV: 80.31% • Leverage: 151.43% • Delta: -0.349 • Theta: -0.0189 • Gamma: 0.1083 • Turnover: 567
IV at 80.31% reflects moderate volatility; delta of -0.349 offers balanced exposure. A 5% downside to $20.14 would yield a $0.14 payoff, or 0.7% of current price. High gamma (0.1083) and turnover (567) ensure liquidity and responsiveness.

Action: Aggressive bears should prioritize OUST20260206P20 for its high leverage and gamma. A 5% move to $20.14 would yield a 0.7% return, but the key is to secure entry before the 200-day MA breaks. Watch for a breakdown below $21.36 (30-day support) to confirm bearish momentum.

Backtest Ouster Stock Performance
The backtest of OUST's performance after a -10% intraday plunge from 2022 to now shows favorable results, with win rates and returns indicating positive short-to-medium-term gains. Here's a detailed analysis:1. Frequency and Win Rates: The event occurred 134 times over the period, with a 3-day win rate of 44.78%, a 10-day win rate of 52.24%, and a 30-day win rate of 58.21%. This suggests that OUST tends to rebound relatively frequently, with higher win rates as the time horizon increases.2. Returns: The average 3-day return following the event was 1.52%, with a maximum return of 36.87% on day 59. The 10-day return was higher at 6.02%, with a maximum return of 41.23% on day 79. The 30-day return was 17.75%, with a maximum return of 48.07% on day 104. These returns indicate that while there is some volatility, OUST has a tendency to recover and even exceed its pre-plunge levels over various time frames.In conclusion, while the -10% intraday plunge presented a potential risk, the backtest indicates that OUST has a strong track record of recovery and positive returns in the short to medium term following such events. Investors might consider these findings when assessing the resilience of OUST in the face of significant price declines.

Short-Term Bear Case: Target $20.50 as 200-Day MA Breaks
Ouster’s technicals and short-interest dynamics suggest a continuation of the bearish trend, with the 200-day MA at $23.25 as the critical inflection point. If the stock closes below $21.36 (30-day support), the 52-week low of $6.34 could become a self-fulfilling prophecy. Meanwhile, Caterpillar (CAT), the sector leader, is down 1.06%, signaling broader machinery sector weakness. Traders should prioritize short-dated puts and monitor the 200-day MA break for a decisive short entry. Act now: Target $20.50 as the next level of concern, with OUST20260206P20 as the top leveraged play.