Texas Instruments Plummets 3.88%: A Volatile Intraday Drama Unfolds

Summary
• Texas Instruments (TXN) plunges 3.88% to $184.65, a sharp reversal from its intraday high of $190.72.
• The stock trades below its 200-day moving average of $181.48, signaling potential bearish momentum.
• Analysts highlight the SM1 fab’s $60B U.S. investment as a long-term catalyst amid short-term volatility.

Today’s dramatic selloff in Texas Instruments has sent shockwaves through the semiconductor sector. With the stock trading at its lowest level since January 2025, investors are scrambling to decipher the cause. The move follows a series of bullish catalysts, including the SM1 fab’s operational launch and a $60B U.S. investment, yet technical indicators and options activity suggest a short-term correction is underway.

Earnings Anticipation and Overbought Correction
The sharp decline in TXN reflects a correction from overbought conditions. The stock had surged 8.41% in the previous session, driven by optimism around the SM1 fab’s production start and the CHIPS Act’s $1.6B funding. However, technical indicators like RSI (71.71) and MACD (2.52) signaled exhaustion. Additionally, the upcoming Q4 2025 earnings report on January 27, 2026, has triggered profit-taking as investors position for potential volatility. The options market also shows heavy put buying at the $185 strike, indicating bearish sentiment ahead of key data.

Semiconductor Sector Mixed as Intel Surges
The semiconductor sector remains fragmented, with Intel (INTC) surging 6.13% on optimism around its 18A process node. Texas Instruments’ decline contrasts with this strength, as investors rotate into AI infrastructure plays. However, TI’s foundational chip focus—critical for automotive and industrial markets—positions it differently from logic-focused peers. The sector’s 20.37% earnings growth forecast suggests long-term resilience, but short-term volatility is likely as earnings season approaches.

Options Playbook: Capitalizing on Volatility and Key Levels
• MACD: 2.52 (bullish divergence)
• RSI: 71.71 (overbought)
• Bollinger Bands: $170.51–$186.19 (current price near lower band)
• 200D MA: $181.48 (critical support)

Technical indicators suggest a short-term bounce from key support levels. The 200-day moving average at $181.48 and the Bollinger Band floor at $170.51 are critical for bulls. A break below $170.51 could trigger a deeper correction, while a rebound above $186.19 may reignite bullish momentum. The options market offers two high-conviction plays:

1. TXN20260116P185 (Put Option)
• Strike: $185 | Expiration: 2026-01-16
• IV: 34.22% (moderate volatility)
• Leverage Ratio: 47.82% (high potential return)
• Delta: -0.4649 (moderate sensitivity)
• Theta: -0.0756 (moderate time decay)
• Gamma: 0.0378 (responsive to price swings)
• Turnover: $72,653 (high liquidity)
This put option offers asymmetric upside in a 5% downside scenario. If TXN drops to $175.42 (5% below current price), the payoff would be $9.58 per contract, translating to a 213% return on the $4.48 premium. The high leverage ratio and moderate delta make it ideal for short-term bearish bets.

2. TXN20260116C187.5 (Call Option)
• Strike: $187.5 | Expiration: 2026-01-16
• IV: 28.19% (reasonable volatility)
• Leverage Ratio: 71.09% (high reward potential)
• Delta: 0.4233 (moderate directional exposure)
• Theta: -0.2649 (aggressive time decay)
• Gamma: 0.0452 (high sensitivity to price moves)
• Turnover: $41,481 (solid liquidity)
This call option is a high-gamma play for a rebound above $187.5. If TXN rallies to $192.07 (intraday high), the payoff would be $4.57 per contract, a 107% return on the $4.23 premium. The aggressive theta decay suits a short-term breakout trade.

Hook: Aggressive bulls may consider TXN20260116C187.5 into a bounce above $187.5, while bears should watch the $185 put for a 5% downside play.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after a -4% intraday plunge from 2022 to the present shows mixed short-term performance but a positive long-term outlook. The 3-Day win rate is 52.06%, the 10-Day win rate is 49.38%, and the 30-Day win rate is 50.82%, indicating a higher probability of positive returns in the short term. However, the maximum return during the backtest period was only 2.22%, suggesting that while TXN has a good chance of recovering from a -4% plunge, the overall returns may be modest.

Act Now: Position for Earnings Volatility and Key Support Tests
The selloff in Texas Instruments reflects a technical correction rather than a fundamental shift. With the stock testing critical support at $181.48 and the 200-day moving average, investors must decide whether to defend these levels or capitalize on the short-term volatility. The options market is pricing in a 34% implied move, suggesting a sharp earnings reaction is likely. Watch for a breakdown below $170.51 or a breakout above $190.72 to define the next phase. For now, the SM1 fab’s long-term potential remains intact, but short-term traders should focus on the $185–$187.5 range. As Intel (INTC) surges 6.13%, the sector’s mixed momentum underscores the need for disciplined risk management.