Workday Plunges 3.8% Amid Bearish Technicals and Volatile Options Activity – What’s Next?

Summary
• Workday (WDAY) trades at $206.55, down 3.83% from its $214.78 previous close
• Intraday range spans $215.4 high to $202.23 low, a 6.4% swing
• Options turnover surges to 4.03M shares, with 2026-01-09 205C contract dominating volume at 434,984 shares
• The stock’s 36.56 RSI and -1.93 MACD signal deepening bearish momentum as traders brace for a critical support test at $202.23

Bearish Technicals and Options Volatility Drive Sharp Selloff
Workday’s 3.83% intraday decline reflects a confluence of bearish technical signals and aggressive options positioning. The stock’s 36.56 RSI—a level typically associated with oversold conditions—has failed to attract buyers, while the -1.93 MACD histogram indicates deteriorating momentum. Bollinger Bands show the price is trading near the lower band at $212.36, with the 200-day MA at $234.58 acting as a distant overhang. Options data reveals heavy short-term bearish positioning, with the 2026-01-09 205C contract (delta 0.57) and 215C contract (delta 0.16) absorbing 434,984 and 29,828 shares of turnover respectively. These contracts suggest traders are hedging against a potential breakdown below the 52-week low of $202.23.

Application Software Sector Sinks with Microsoft’s 2.3% Drop as Workday Trails
The Application Software sector is under pressure, with Microsoft (MSFT) leading the decline at -2.298%. Workday’s 3.83% drop outpaces the sector leader, indicating sector-wide weakness but with WDAY exhibiting more aggressive bearish momentum. The sector’s 200-day MA at $228.24 is also a distant resistance level for Microsoft, suggesting broader technical exhaustion in the space.

Bearish Positioning Favors 205C and 215C as Key Plays Amid Volatility Expansion
• 200-day MA: $219.35 (below) | RSI: 36.56 (oversold) | MACD: -1.93 (bearish) | Bollinger Bands: $212.36 (lower band) | Turnover Rate: 1.91%

Key levels to monitor include the 52-week low at $202.23 and the 30-day support range of $214.71–215.12. The RSI’s oversold reading and MACD’s bearish divergence suggest further downside potential, though the 200-day MA at $234.58 remains a distant overhang. With no leveraged ETF data available, options remain the primary vehicle for positioning.

Top Options Picks:
1. WDAY20260109C205
• Contract Code: WDAY20260109C205
• Type: Call
• Strike Price: $205
• Expiration: 2026-01-09
• IV: 24.95% (moderate)
• LVR: 55.70%
• Delta: 0.57 (moderate sensitivity)
• Theta: -0.7846 (high time decay)
• Gamma: 0.0515 (high sensitivity to price moves)
• Turnover: 434,984 (high liquidity)
• Payoff at 5% downside ($196.22): $0 (strike above price)
• This contract offers a balance of leverage and liquidity, ideal for capitalizing on a potential rebound from the 52-week low.

2. WDAY20260109C215
• Contract Code: WDAY20260109C215
• Type: Call
• Strike Price: $215
• Expiration: 2026-01-09
• IV: 28.06% (moderate)
• LVR: 282.29%
• Delta: 0.16 (low sensitivity)
• Theta: -0.3052 (moderate time decay)
• Gamma: 0.0289 (moderate sensitivity)
• Turnover: 29,828 (reasonable liquidity)
• Payoff at 5% downside ($196.22): $0 (strike above price)
• The 215C’s high leverage ratio (282.29%) makes it a speculative play for a sharp rebound, though its low delta limits directional exposure.

Trading View: Aggressive bears should target the 205C for a potential bounce above $205, while the 215C offers high-risk, high-reward potential if the stock breaks above $215. Watch for a breakdown below $202.23 to trigger further selling.

Backtest Workday Stock Performance
The backtest of WDAY's performance after a -4% intraday plunge from 2022 to now shows favorable results, with win rates and returns indicating the ETF has tended to recover and even exceed its initial value in the following days:

Break Below $202.23 Could Trigger Cascading Selloff – Position Now
Workday’s technicals and options positioning point to a critical juncture. A breakdown below the 52-week low of $202.23 would validate the bearish case, with the 200-day MA at $234.58 acting as a distant overhang. The sector’s weakness, led by Microsoft’s 2.3% drop, amplifies the risk of a broader selloff. Traders should prioritize the 205C for a potential rebound and the 215C for speculative upside. Watch for $202.23 breakdown or regulatory reaction.