Workday Plunges 3.06%: Is the AI Hiring Tech Controversy the Catalyst Behind Workday's Sharp Decline?

Summary
• Workday (WDAY) plunges 3.06% to $222.345, hitting intraday low of $222.035
• Intraday range spans $228.74 high to $222.035 low amid 2.5M turnover
• 52-week range remains wide at $199.81 to $294.00

Workday’s sharp decline has drawn attention as the stock slumps to a 52-week low, driven by regulatory concerns over its AI hiring technology. The drop comes amid broader sector weakness, with peers like ServiceNow also under pressure. Technical indicators suggest a bearish short-term outlook, while options activity highlights speculative positioning around key price levels.

AI Hiring Tech Controversy Sparks Regulatory Scrutiny
A judge’s order requiring Workday to disclose all employers using its HiredScore AI hiring product has intensified regulatory scrutiny. This development raises concerns about potential legal risks and reputational damage, particularly as AI ethics debates intensify. The ruling, reported by HR Dive, has triggered immediate sell-offs as investors reassess growth prospects and compliance costs tied to AI integration.

Software Sector Volatility Intensifies as ServiceNow Follows Downward Trend
The Software - Application sector is under pressure, with ServiceNow (NOW) down 3.11% alongside Workday’s 3.06% drop. Both stocks are reacting to broader macroeconomic uncertainties and sector-specific regulatory headwinds. The synchronized decline underscores a risk-off sentiment across cloud and SaaS providers, despite Workday’s unique exposure to AI litigation.

Options Playbook: Leveraging Put Options Amid Volatility
• 200-day MA: 250.07 (far below current price)
• RSI: 57.23 (neutral territory)
• Bollinger Bands: Price at $222.345 near lower band ($221.92)
• MACD -1.12 vs. signal line -1.71 (bearish divergence)

Workday’s price action suggests a short-term breakdown below critical support levels. Key resistance is the 234.71 middle Bollinger band, while the 222.03 intraday low offers a potential floor. A 5% downside scenario (to $211.23) would test long-term resilience.

Top Options Contracts:
1. WDAY20250808C227.5 (Call)
• Strike: 227.5 | Expiry: 2025-08-08 | IV: 30.10% | LVR: 118.06% | Delta: 0.3049 | Theta: -0.5758 | Gamma: 0.0354 | Turnover: 2,553
• LVR (Leverage Ratio): High potential return on modest price moves
• IV (Implied Volatility): Moderate, aligns with market uncertainty
• Delta: Sensitivity to price changes within target range
• Theta: Strong time decay for short-term plays
• Gamma: High sensitivity to price swings
• Turnover: Liquid enough for entry/exit
• This call option offers asymmetric upside if Workday rallies above $227.5 before August 8. A 5% downside would see zero payoff, but the high gamma and leverage ratio make it ideal for directional bets.

2. WDAY20250815C232.5 (Call)
• Strike: 232.5 | Expiry: 2025-08-15 | IV: 29.21% | LVR: 126.83% | Delta: 0.2344 | Theta: -0.2809 | Gamma: 0.0234 | Turnover: 4,399
• LVR: Exceptional leverage for aggressive positioning
• IV: Slightly lower but still supportive of volatility
• Delta: Moderately sensitive to price recovery
• Theta: Strong time decay for short-term traders
• Gamma: Reasonable sensitivity to price swings
• Turnover: High liquidity for execution
• This contract is optimal for capitalizing on a potential rebound above $232.5. While a 5% downside would yield no payoff, the high leverage ratio rewards those betting on a reversal.

Hook: Aggressive bulls may consider WDAY20250815C232.5 if the stock breaks above $234.71 (middle Bollinger band).

Backtest Workday Stock Performance
Workday (WDAY) experienced a notable intraday plunge of -3% on July 14, 2025. Following this event, the stock's performance showed a strong recovery over the subsequent days:1. July 15, 2025: WDAY opened 1.1% higher, indicating a positive rebound from the previous day's dip.2. July 16, 2025: The stock continued its upward trend, closing 2.6% higher, suggesting investor confidence was restored.3. July 17, 2025: WDAY saw a more significant surge, ending the day 4.8% higher, which could be indicative of a strong buyer momentum following the initial drop.This recovery was likely supported by several factors, including:- Positive Company Developments: Workday's recent announcements, such as the launch of a subsidiary for the U.S. government and partnerships with universities, suggest a forward-looking positive trajectory.- Market Sentiment: The broader market sentiment towards Workday, including analyst ratings and insider activities, did not indicate any major concerns that would have prolonged the stock's downturn.In conclusion, while a -3% intraday plunge is significant, WDAY demonstrated a robust ability to recover, showing a positive trend in the immediate aftermath of the drop.

Urgent Sell-Off: Position for Volatility or Rebound?
Workday’s sharp decline reflects regulatory risks and sector-wide jitters. While the 52-week low at $199.81 remains distant, a breakdown below $222.03 could trigger deeper selling. Key levels to watch include the 200-day MA at $250.07 and the Bollinger lower band at $221.92. Meanwhile, ServiceNow’s -3.11% slide highlights sector fragility. Traders should prioritize short-term options like WDAY20250808C227.5 for directional bets or monitor $234.71 for a potential reversal.