Quest Diagnostics Plunges 5.3%, What’s Fueling This Sharp Selloff?

Summary
• Quest Diagnostics (DGX) trades at $168.74, down 5.33% from its $178.24 close
• Intraday range of $168.74–$180.89 highlights volatile session
• Earnings report beat estimates, yet shares collapse amid options-driven turbulence

Quest Diagnostics’ stock is in freefall despite a robust earnings report, with shares hitting a 52-week low. The selloff defies conventional logic, as the company raised full-year guidance and reported 15.2% revenue growth. Yet, the stock’s sharp decline suggests a mix of profit-taking, options expiration dynamics, and sector-specific pressures. With $1.26B in turnover and a 1.13% turnover rate, the market is reacting to a complex interplay of technical and structural factors.

Options-Driven Turbulence Overshadows Strong Earnings
Despite Quest Diagnostics reporting $2.76B in Q2 revenue (up 15.2% YoY) and raising full-year adjusted EPS guidance to $9.63–$9.83, the stock’s 5.33% drop indicates short-term positioning shifts. The options chain reveals heavy activity in August 2025 contracts, particularly in the DGX20250815P165 put and DGX20250815C180 call. High implied volatility (23.27% for the put, 20.65% for the call) and leveraged ratios (94.61% and 227.06%, respectively) suggest aggressive short-term bets. The selloff likely reflects profit-taking from long positions and gamma-driven selling as traders hedge leveraged positions ahead of expiration.

Healthcare Providers & Services Sector Mixed as DGX Drives Volatility
The broader healthcare sector showed mixed momentum, with Labcorp (LH) down 0.62%. While DGX’s decline is steeper, the sector’s muted response suggests the selloff is stock-specific rather than sector-driven. DGX’s volatility is amplified by its high leverage in the options market, contrasting with the more stable performance of sector peers.

Bearish Puts and Gamma-Driven Calls for DGX’s August Expiry
• 200-day MA: $164.9989 (below current price)
• RSI: 48.28 (neutral)
• MACD: -1.78 (bearish divergence)
• Bollinger Bands: Lower band at $163.22 (critical support)

Key levels to watch: $163.22 (lower Bollinger band), $173.36 (20-day MA), and $183.50 (upper Bollinger band). The short-term bearish bias is reinforced by the DGX20250815P165 put, which has high leverage (94.61%) and gamma (0.032989), making it sensitive to price swings. For bulls, the DGX20250815C180 call offers 227.06% leverage but faces headwinds from the stock’s proximity to its 52-week low. A 5% downside scenario (to $160.30) would trigger a 120% payoff for the put but a 76.56% loss for the call. Aggressive traders may consider shorting the DGX20250815C180 if the stock fails to rebound above $180.

Backtest Quest Diagnostics Stock Performance
The iShares Gold Trust (DGX) has historically shown positive performance after experiencing a -5% intraday plunge. The 3-Day win rate is 54.29%, the 10-Day win rate is 54.99%, and the 30-Day win rate is 58.84%, indicating a higher probability of positive returns in the short term following such events. The maximum return during the backtest period was 3.18%, suggesting that while there is potential for gains, the returns may not always be significantly high.

DGX at Inflection Point: Watch $163.22 Support and Sector Leadership
Quest Diagnostics’ sharp selloff highlights a critical juncture for the stock. While fundamentals remain strong, technical indicators and options activity suggest near-term volatility. Investors should monitor the $163.22 lower Bollinger band as a key support level. Meanwhile, Labcorp’s -0.62% move underscores the sector’s fragility. Aggressive traders may short the DGX20250815C180 if the stock breaks below $173.36, while conservative investors should wait for a rebound above $180.89 to re-enter long positions.