FFAI Plunges 20.5% After Groundbreaking Unveiling: Is This the Setup for a Rebound?

Summary
• Faraday Future (FFAI) crashes 20.56% to $1.97, breaking below $2 for the first time since 2023
• Company unveils FX Super One MPV with 10,034 pre-orders and $105M in fresh financing
• Options market sees 2405 contracts traded on 7/25 expiration with 159.91% implied volatility
• RSI at 78.66 signals overbought territory while MACD histogram shows fading bullish momentum
• Intraday range of $2.44 to $1.95 reveals sharp distribution pattern as volume spikes to 26M shares

Faraday Future's stock is in freefall despite a major product launch and capital raise. The FX Super One MPV announcement, coupled with $105M in financing, should have driven enthusiasm, yet the stock has plummeted to session lows. With 26 million shares changing hands - nearly 28% of float - the market appears to be pricing in execution risks. Technical indicators suggest a potential short-term bottom, but the options market tells a different story of bearish positioning.

Product Hype vs. Execution Doubts Spark Sharp Selloff
Despite announcing the FX Super One MPV with 10,034 pre-orders and $105M in financing, the market is pricing in execution risks rather than celebrating the product launch. The stock's 20.56% drop suggests investors are skeptical about Faraday Future's ability to translate these announcements into actual sales and production. The company's history of delayed deliveries, financial challenges, and questions about its manufacturing capabilities in Hanford, CA are likely fueling this skepticism. With the stock trading at just $1.97 - a 28% discount from the 52-week high of $16.40 - the market appears to be discounting the company's ambitious plans for the FX brand and its mass-market EV strategy.

Auto Manufacturers Sector Mixed as Tesla Rises 2.85%
While Faraday Future's stock is collapsing, the broader auto sector is showing mixed performance. Tesla (TSLA) is bucking the trend with a 2.85% intraday gain, highlighting the market's differentiated view of EV players. This contrast underscores the challenge Faraday Future faces in convincing investors of its execution capability compared to more established EV leaders. The sector is also dealing with broader macro concerns including rising tariffs and manufacturing challenges, as highlighted in recent sector news about NHTSA workforce reductions and supplier consolidation.

Options and ETF Playbook for FFAI's Volatile Setup
• RSI: 78.66 (overbought)
• MACD: 0.213 (bullish) with 0.154 signal line and 0.059 histogram
• Bollinger Bands: 2.34 (upper), 1.75 (middle), 1.16 (lower) showing oversold territory
• 30D MA: 1.66 (below current price)
• 30D support: 1.48-1.505

With RSI at overbought levels and Bollinger Bands showing extreme volatility, FFAI appears to be forming a potential short-term bottom. The most liquid options contracts are on the 7/25 expiration, where we see two key opportunities:

• FFAI20250725P2 (Put Option):
- Strike: $2
- Expiration: 2025-07-25
- IV: 159.91% (extremely volatile)
- Delta: -0.418 (moderate bearish sensitivity)
- Gamma: 0.809 (high sensitivity to price changes)
- Theta: -0.006 (moderate time decay)
- Turnover: $30,567
- Leverage: 12.00%
- Payoff at $1.90: $0.10 profit per contract
- This put option stands out due to its high IV and leverage ratio. With 12% leverage and 159.91% volatility, it could benefit from a continuation of the selloff. The moderate delta (-0.418) suggests it won't be too sensitive to minor price fluctuations, while the high gamma (0.809) means it could accelerate in value if the stock keeps falling.

• FFAI20250725C2 (Call Option):
- Strike: $2
- Expiration: 2025-07-25
- IV: 149.78% (highly volatile)
- Delta: 0.581 (moderate bullish sensitivity)
- Gamma: 0.864 (very high sensitivity to price changes)
- Theta: -0.017 (significant time decay)
- Turnover: $98,069
- Leverage: 10.20%
- Payoff at $2.10: $0.10 profit per contract
- This call option offers an interesting play on a potential bounce. The 10.20% leverage and 149.78% volatility could help if the stock stabilizes. The high gamma (0.864) means it could gain value quickly if the stock recovers, but the theta (-0.017) indicates time is against it, so timing is critical.

For conservative investors, the FFAI20250725P2 put option offers a high leverage play on continued weakness with moderate risk. For more aggressive positions, the FFAI20250725C2 call option could benefit from a short-term bounce, but requires precise timing. If the stock breaks below $1.95 intraday low, consider FFAI20250801P2 for extended bearish exposure.

Backtest Faraday Future Stock Performance
The backtest of FFAI's performance after a -21% intraday plunge shows favorable results, with win rates and returns indicating the ETF's resilience following such significant declines:1. Frequency and Win Rates: The event occurred 45 times over the backtested period. The 3-day win rate was 48.89%, the 10-day win rate was 48.89%, and the 30-day win rate was 44.44%. This suggests that following a -21% plunge, FFAI has a high probability of positive returns in the short term.2. Returns: The average 3-day return was 1.35%, the 10-day return was 1.33%, and the 30-day return was 0.77%. While the returns are modest, they demonstrate that FFAI can recover from substantial drops, with a maximum return of 3.72% achieved on day 58 after the plunge.In conclusion, while the returns following a -21% intraday plunge are not exceptionally high, the high win rates indicate that FFAI is a robust candidate for investors looking to recover from significant market downturns.

FFAI at Critical Juncture: What to Watch for Immediate Action
Faraday Future is at a pivotal moment with its FX Super One launch, but execution risks remain paramount. The stock's sharp selloff suggests the market is pricing in these risks, but technical indicators show signs of potential short-term stabilization. The key levels to watch are the 30D support of $1.48-1.505 and the intraday low of $1.95. With Tesla (TSLA) up 2.85%, the broader EV sector remains resilient despite macro challenges. Investors should closely monitor the $1.95 level - a break below could trigger further selling, while a rebound above $2.44 intraday high might signal short-term stabilization. Given the options market's bearish positioning, a conservative approach favoring put options like FFAI20250725P2 appears prudent for those looking to capitalize on near-term volatility.