Texas Instruments Plunges 3.46%, Can Tariff Fears Be Contained Before the Next Sell-Off?

Summary
• Texas Instruments (TXN) tumbles 3.46% to $181.65, its worst intraday drop in months
• Intraday range narrows sharply between $181.46 and $186.91 amid heavy volume
• Sector peers like Analog Devices (ADI) also retreat as trade war anxieties resurface

As the semiconductor sector braces for another round of geopolitical headwinds, Texas Instruments' sharp intraday collapse has ignited fresh concerns. With the stock trading nearly 3.5% below its opening price and volatility surging in the options market, investors are scrambling to parse the implications of escalating U.S.-China trade tensions and sector-specific challenges. The move comes against a backdrop of mixed signals from semiconductor leaders and a broader market grappling with AI-driven demand versus regulatory headwinds.

Tariff Warnings and Sector-Wide Jitters Fuel Sharp Selloff
The dramatic sell-off in Texas Instruments stems from a confluence of sector-specific and macroeconomic factors. The company's recent CEO warning about potential tariff impacts on its business has crystallized investor fears, particularly with the Trump administration's ongoing investigation into chip import risks. Compounding this, China's recent probe into Nvidia H20 chips and the broader regulatory scrutiny of U.S. semiconductor exports have created a toxic mix of uncertainty. The stock's breakdown below critical support levels coincided with heavy put buying in the options market, indicating aggressive hedging against further deterioration in trade dynamics. With the stock now trading near its 52-week low of $139.95, the immediate focus shifts to whether these fears are overblown or a harbinger of deeper sector trouble.

Semiconductor Sector Falters as Trade War Fears Intensify
The semiconductor sector is experiencing broad-based weakness as trade tensions dominate market sentiment. Analog Devices (ADI), the sector's top performer this year, is also retreating with a 2.05% intraday decline, reflecting shared vulnerabilities across the space. This synchronized weakness contrasts with the robust performance of AI-focused peers like AMD and NVIDIA earlier in the year, which benefited from China's resumption of H20 chip purchases. However, recent regulatory headwinds—including China's investigation into U.S. chip exports and the Trump administration's pending import review—have created a more cautious environment. The sector's collective retreat underscores the fragility of current valuations in the face of geopolitical uncertainty.

Bearish Options and ETF Strategy Amid Volatility Surge
• 200-day average: 189.94 (well above current price)
• RSI: 17.84 (extremely oversold)
• MACD: -3.65 (negative divergence with price)
• Bollinger Bands: Lower band at 180.50 (current price near support)

The technical setup suggests an overbought bearish scenario with limited upside potential. Key levels to watch include the 200-day moving average at $189.94 and the Bollinger Band floor at $180.50. With the RSI in oversold territory, a rebound is possible but unlikely to reverse the broader downtrend. The options market offers compelling bearish exposure, particularly for traders expecting a 5% correction to $172.57.

Top Options Picks:
• TXN20250808P180 (Put Option):
- Strike: $180
- Expiration: 2025-08-08
- IV: 26.76% (moderate volatility)
- Delta: -0.387 (strong directional sensitivity)
- Theta: -0.0289 (low time decay)
- Gamma: 0.0501 (high sensitivity to price changes)
- Turnover: $14,601
• TXN20250808P190 (Put Option):
- Strike: $190
- Expiration: 2025-08-08
- IV: 25.82% (attractive volatility)
- Delta: -0.387 (strong directional sensitivity)
- Theta: -0.0140 (minimal time decay)
- Gamma: 0.0315 (moderate sensitivity)
- Turnover: $31,789

These contracts offer optimal risk/reward profiles for bearish positions. The $180 put provides a 5.8% leverage ratio with moderate volatility, while the $190 put offers a 324x leverage ratio for more aggressive downside exposure. A 5% price drop to $172.57 would yield 61% returns on the $180 put and 29% on the $190 put. Given the stock's proximity to critical support levels and the sector's broader weakness, these options represent strategic hedges against further deterioration.

Backtest Texas Instruments Stock Performance
The backtest of Texas Instruments (TXN) after a -3% intraday plunge shows favorable performance metrics. The 3-Day win rate is 55.09%, the 10-Day win rate is 53.42%, and the 30-Day win rate is 57.43%. This indicates that TXN tends to rebound in the short term following a significant intraday decline. The maximum return during the backtest period was 2.94%, which occurred on day 59, suggesting that while the stock may experience some volatility, it has the potential for positive gains in the days following a steep drop.

Urgent Action Required as TXN Tests Key Support Levels
The immediate priority for investors is monitoring the $180.50 support level identified in the Bollinger Bands and the 200-day moving average at $189.94. A sustained break below $180 would validate the bearish thesis and likely trigger a cascade of stop-loss orders. Sector leaders like Analog Devices (ADI) at -2.05% further underscore the systemic risks facing the space. With the options market already pricing in significant downside, the key question is whether this correction represents a buying opportunity for long-term holders or the start of a deeper selloff. Aggressive traders may consider the TXN20250808P180 put as a tactical play, while more conservative investors should await a potential bounce above $189.94 before reassessing their positions. Watch for the Trump administration's upcoming import investigation results as the next major catalyst.