Spotify Plunges 2.75% Amidst Technical Downtrend and Options Volatility – What’s Fueling the Selloff?

Summary
• Spotify Technology (SPOT) tumbles 2.75% to $519.95, its lowest since late 2024
• RSI hits oversold territory at 30.6, while MACD (-14.16) signals bearish momentum
• Options chain sees heavy activity on 530/535 strike calls ahead of 1/23 expiration

Spotify’s sharp intraday decline has ignited a bearish technical cascade, with the stock trading near its 52-week low of $475.01. The move coincides with elevated options volatility and a deteriorating RSI reading, suggesting short-term overselling. Traders are now scrutinizing key support levels and leveraged ETF SPOG’s -6.2% drag as potential catalysts for further downside.

Bearish Technicals and Options Expiry Pressure
The selloff is driven by a confluence of technical exhaustion and options-driven liquidity shifts. RSI at 30.6 indicates oversold conditions, while the MACD (-14.16) and negative histogram (-3.8) confirm bearish momentum. The stock’s 516.15 intraday low breaches the Bollinger Bands lower boundary (534.94), triggering algorithmic selling. Options data reveals heavy short-dated call activity on 530/535 strikes, with SPOT20260123C530 showing 63.33% leverage and 36.52% implied volatility, suggesting aggressive bearish positioning ahead of the 1/23 expiry.

Bearish Setup: ETFs and Options for Short-Term Volatility
• 200-day MA: 650.66 (far above current price)
• RSI: 30.6 (oversold)
• MACD: -14.16 (bearish)
• Bollinger Bands: 534.94 (lower boundary)
• SPOG ETF: -6.2% (2X leveraged SPOT ETF)

Key levels to watch: 534.94 (Bollinger Bands support), 570.16 (20-day MA), and 530 (critical call strike). The 52-week low of $475.01 remains a critical psychological threshold. With RSI in oversold territory and MACD diverging, a continuation of the downtrend is likely unless the stock reclaims 534.94. The Leverage Shares 2X Long SPOT Daily ETF (SPOG) at -6.2% amplifies downside risk for leveraged bulls.

Top Option 1: SPOT20260123C530
• Strike: $530, Expiry: 1/23
• IV: 36.52% (high volatility)
• Leverage: 63.33% (aggressive)
• Delta: 0.3656 (moderate sensitivity)
• Theta: -1.360 (rapid time decay)
• Gamma: 0.0119 (responsive to price swings)
• Turnover: $27,076 (liquid)
• Payoff (5% down): $15.08 (max(0, 519.950.95 - 530))
This contract offers high leverage and liquidity, ideal for capitalizing on continued bearish momentum ahead of expiry.

Top Option 2: SPOT20260123C535
• Strike: $535, Expiry: 1/23
• IV: 36.52% (high volatility)
• Leverage: 68.29% (aggressive)
• Delta: 0.3656 (moderate sensitivity)
• Theta: -1.360 (rapid time decay)
• Gamma: 0.0119 (responsive to price swings)
• Turnover: $27,076 (liquid)
• Payoff (5% down): $10.08 (max(0, 519.950.95 - 535))
This contract provides higher leverage but slightly lower intrinsic value, suitable for aggressive bearish bets.

Trading View: Aggressive bears should prioritize SPOT20260123C530 for its liquidity and leverage. If 534.94 breaks, consider shorting SPOT20260123C535 for amplified downside exposure.

Backtest Spotify Technology Stock Performance
After experiencing a -3% intraday plunge from 2022 to the present, Spotify Technology (SPOT) has shown positive short-to-medium-term performance. The backtest results indicate that SPOT has a high win rate across various time frames:1. 3-Day Win Rate: 59.28%, with an average return of 1.37% over 3 days.2. 10-Day Win Rate: 64.67%, with an average return of 3.13% over 10 days.3. 30-Day Win Rate: 73.05%, with an average return of 8.38% over 30 days.4. Maximum Return: 15.36%, achieved on day 59, indicating significant positive movement after the initial plunge.These results suggest that while SPOT may experience short-term volatility, it tends to recover and even exceed its pre-plunge levels in the following days and weeks.

Urgent Action Required: Short-Term Bearish Bias Intensifies
The technical landscape for SPOT remains decisively bearish, with RSI in oversold territory and a deteriorating MACD. Immediate focus should be on the 534.94 support level and the 530/535 call strikes, which could dictate near-term direction. The sector leader AAPL (-0.9%) offers a benchmark for broader market sentiment. Investors should prioritize short-term bearish options or leveraged ETFs like SPOG (-6.2%) to capitalize on the downtrend. Watch for a breakdown below 534.94 or a reversal in AAPL’s trajectory to confirm the next move.