Comstock's 24% Plunge: What's Behind the Sudden Drop?

Summary
• Comstock (LODE) plunges 24% intraday, trading at $2.295 amid a $30 million equity offering.
• CEO Corrado De Gasperis claims the offering will eliminate debt and fund solar panel recycling projects.
• Technical indicators show RSI at 19.12 (oversold) and MACD at -0.119 (bearish divergence).

Comstock Inc. (LODE) has experienced a dramatic 24% intraday drop, trading at $2.295 as of 5:41 PM EDT. The stock opened at $2.51 and hit a low of $2.28, with a turnover of 3.24 million shares. The sharp decline coincides with the company’s $30 million public offering, which CEO Corrado De Gasperis claims will strengthen its cash position and fund commercialization of solar panel recycling facilities. Traders are now scrutinizing technical signals and options activity for clues about the stock’s near-term trajectory.

Equity Offering Sparks Sharp Correction
Comstock’s 24% intraday drop is directly tied to its $30 million public offering, announced earlier in the day. The company priced 13.33 million shares at $2.25, with an over-allotment option for 2 million additional shares. While management framed the offering as a strategic move to eliminate debt and fund growth, the market reacted negatively, interpreting the dilutive capital raise as a sign of financial distress. The offering’s timing—just days before the company’s Q2 earnings call—has amplified investor skepticism, with many viewing the move as a desperate liquidity play rather than a catalyst for long-term value creation.

Mining Sector Mixed as Comstock's Offering Drives Disproportionate Drop
The broader mining sector showed mixed performance, with Newmont (NEM) down 0.52% and peers like Avino Silver (ASM) and Platinum Group (PLG) trading flat to slightly lower. However, Comstock’s 24% drop far outpaced sector trends, indicating stock-specific factors. The offering’s dilutive nature and lack of immediate operational upside contrasted with peers’ focus on production growth and exploration. While the sector remains cautiously optimistic about gold and lithium prices, Comstock’s equity issuance has created a short-term overhang, deterring speculative buyers.

Bearish Options Play Amid Oversold RSI and High Volatility
• 200-day average: 1.872 (below current price)
• RSI: 19.12 (oversold)
• MACD: -0.119 (bearish divergence)
• Bollinger Bands: Price at 2.295 (near lower band of 2.927)

Comstock’s technicals suggest a short-term bearish bias, with RSI in oversold territory and MACD showing bearish divergence. The stock is trading near its 200-day average, which could act as a support level. However, the high implied volatility (IV) in options indicates market uncertainty. Two options stand out for bearish exposure:

• LODE20250919P2.5 (Put Option):
- Strike Price: $2.50
- Expiration: 2025-09-19
- IV Ratio: 100.05% (high volatility)
- Leverage Ratio: 5.80% (moderate)
- Delta: -0.522 (sensitive to price drops)
- Theta: -0.0021 (slow time decay)
- Gamma: 0.5319 (high sensitivity to price movement)
- Turnover: 9,627 (liquid)
This put option is ideal for a bearish bet, with high gamma and delta amplifying gains if the stock continues to fall. A 5% downside from $2.295 to $2.18 would yield a payoff of $0.32 per contract.

• LODE20251017P2 (Put Option):
- Strike Price: $2.00
- Expiration: 2025-10-17
- IV Ratio: 94.44% (moderate)
- Leverage Ratio: 11.60% (high)
- Delta: -0.278 (less sensitive to small moves)
- Theta: -0.0018 (slow decay)
- Gamma: 0.3599 (moderate sensitivity)
- Turnover: 2,505 (liquid)
This option offers higher leverage for a longer-term bearish play, with a 5% downside scenario yielding a $0.29 payoff. Its lower delta makes it less volatile to immediate price swings but more suited for a gradual decline.

Action: Aggressive bears should prioritize LODE20250919P2.5 for short-term gains, while longer-term bearish traders may consider LODE20251017P2.

Backtest Comstock Stock Performance
The backtest of LODE's performance after a -24% intraday plunge shows mixed results. While the 3-day win rate is 45.45%, the 10-day win rate is 49.39%, and the 30-day win rate is 47.58%, indicating a higher probability of positive returns in the short term. However, the maximum return during the backtest period was only 16.16%, which suggests that while there is a chance of recovery, the potential upside may be limited.

Bullish Long-Term Outlook Amid Short-Term Volatility
Comstock’s 24% drop is a short-term correction driven by its equity offering, not a fundamental collapse. The RSI at 19.12 suggests a potential rebound, but the bearish MACD and low volume indicate lingering selling pressure. Investors should monitor the 200-day average ($1.87) as a critical support level. If the stock holds above $2.20, the long-term bullish case for solar panel recycling and debt reduction remains intact. Meanwhile, sector leader Newmont (NEM) down 0.52% highlights broader mining sector caution. Watch for a rebound from oversold RSI or a breakdown below $2.20 to trigger further selling.