BHP Plummets 3%—Battery Alliances or Bearish Techs Driving the Slide?

• BHP shares crash to $50.16 intraday, down 3.17% from open, hitting 1.5% below its 200-day moving average
• Partnerships with CATL and BYD spark skepticism, while Congo’s cobalt export ban adds sector-wide pressure
• Rio Tinto mirrors weakness, falling 2.4%, as BHP’s technicals flirt with Bollinger Band lower support at $45.50

BHP’s sharp decline on July 15 marks a critical test of its $48.50–$51.50 trading range, with the stock now 20% below its 52-week high. The intraday swing—from $51.51 to $50.16—highlights volatile investor sentiment as sustainability pivots clash with near-term execution risks.

Market Skepticism Toward Battery Partnerships Sparks Selling
BHP’s plunge stems from investor doubt over its high-profile alliances with CATL and BYD to electrify mining fleets. While the partnerships aim to slash diesel reliance and meet 2030 emissions targets, traders are unconvinced of the timeline or cost-effectiveness of transitioning heavy equipment. The lack of concrete capital expenditure metrics or phased implementation timelines has triggered profit-taking, compounded by sector-wide concerns like Congo’s cobalt export restrictions and copper smelter shortages. The stock’s 200-day MA breach further amplifies technical pessimism.

Sector-Wide Volatility Fuels Downward Momentum
BHP’s decline mirrors broader industrial metals sector weakness, with Rio Tinto (RIO) down 2.4% and Vale under pressure from regulatory risks. However, BHP’s 3% drop outperforms peers due to its outsized exposure to battery metal transitions. While nickel and copper projects like Jansen potash offer long-term promise, near-term execution hurdles—paired with weak commodity price signals—explain the sharper decline. The sector’s 52-week lows remain distant, but traders are pricing in execution overhang.

Bearish Options and Technical Breaks Offer Trading Opportunities
• 200-day MA: $51.00 (current price below)
• RSI: 74.68 (overbought, signaling near-term correction)
• Bollinger Bands: Lower band at $45.50, current price near support
• MACD: Histogram at 0.41 (bullish momentum fading)

Bulls face resistance at $51.50 (day’s high), while bears target $48.50 (30-day support). Below this level, $45.50 Bollinger Band support looms. Two top options for aggressive traders:

1. BHP20250815P47.5 (Put): Strike $47.50 | Expiry Aug 15, 2025
- Delta: -0.228 (sensitive to downside)
- Theta: -0.021 (moderate time decay)
- Gamma: 0.069 (enhances gains on price swings)
- Leverage: 84% (high payoff potential)
- Why: High liquidity ($288k turnover) and mid-IV (29%) make it ideal for a breach below $48.50. A 5% drop to $47.76 yields $0.74/contract gains.

2. BHP20250718C50 (Call): Strike $50 | Expiry July 18, 2025
- Delta: 0.605 (responsive to rebounds)
- Theta: -0.061 (fades quickly with time)
- Gamma: 0.203 (sharp upside sensitivity)
- Leverage: 50% (balanced risk-reward)
- Why: A contrarian bet for a bounce above $51.50. High gamma (0.203) amplifies gains if volatility rebounds.

Hook: If BHP breaches $48.50, the Aug $47.50 put offers 100%+ returns by expiry. Fade rebounds until BHP recovers above its 200-day MA.

Backtest BHP Group Stock Performance
The backtest of BHP's performance after an intraday plunge of at least -3% shows mixed results. While the 3-day win rate is 49.83%, indicating a slight majority of positive returns in the short term, the 10-day and 30-day win rates are lower at 49.17% and 50.00%, respectively. This suggests that while BHP tends to recover some of the lost ground in the immediate aftermath of a significant drop, its performance over longer periods is more volatile.

BHP Faces Critical Support Test—Watch for Sector Leadership
BHP’s pivot to battery-driven sustainability faces near-term tests as technicals and sector dynamics collide. Traders will monitor the $48.50 support zone—a break risks acceleration toward $45.50 Bollinger Band support. Meanwhile, Rio Tinto’s 2.4% decline underscores broader caution. Aggressive shorts should target the Aug $47.50 put until BHP recovers above its 200-day MA. Bulls, however, face an uphill battle unless commodity prices stabilize and emissions timelines clarify. Action Alert: Fade rebounds—BHP’s pivot isn’t yet priced to perfection.