Huntsman Crashes 10.15%—Is This the Harbinger of a Sector-Wide Collapse?

Summary
• Huntsman (HUN) plunges 10.15% to $10.845, breaching its 52-week low of $10.13
• Intraday volatility widens to 2.79% as volume surges 262% above average
• Analysts slash price target to $26.00 while legal battles with LDS Church dominate headlines
• Sector leader DOW (DOW) also tumbles 19.34%, amplifying bearish sentiment

Amid a volatile trading session marked by extreme price compression and regulatory turbulence, Huntsman’s sharp decline has ignited a firestorm of speculation. With the stock trading near its 52-week low and sector peers following suit, investors are scrambling to decipher whether this is a short-term selloff or a precursor to a broader market rout. The confluence of deteriorating fundamentals, legal entanglements, and sector-wide weakness has created a perfect storm for risk-off positioning.

Analyst Price Target Cut and Legal Turmoil Fuel Exodus
Huntsman’s freefall was catalyzed by a $26.00 price target cut from analysts, signaling deepening pessimism about earnings recovery. Compounding the issue, ongoing legal disputes with the LDS Church over tithing practices have eroded investor confidence. Media coverage highlights the church’s appeals to the 9th Circuit, framing the case as a 'profound threat to religious liberty.' These developments, coupled with weak technical indicators like a -94 P/E ratio and a 2.6% turnover rate, have triggered a liquidity crunch as algorithmic traders exacerbate the selloff through margin calls and stop-loss triggers.

Chemicals Sector Reels as DOW’s 19.34% Drop Amplifies Weakness
The Chemicals sector is in freefall, with DOW (DOW) leading the rout with a 19.34% intraday drop. Huntsman’s 10.15% decline mirrors the sector’s systemic fragility, driven by collapsing demand for commodity chemicals and rising production costs. While DOW’s scale amplifies its influence, Huntsman’s legal headwinds and underperforming balance sheet make it particularly vulnerable. The sector’s -19.34% move underscores a broader shift in risk appetite, with investors favoring cash over cyclical plays.

Bearish Options and ETF Strategy in a Volatile Environment
• 200-day MA: 16.215 (far above) • RSI: 60.05 (neutral) • MACD: 0.1158 (bullish divergence) • Bollinger Bands: 12.19 (upper), 11.19 (middle), 10.19 (lower)

Key levels to monitor include the 52-week low at $10.13 and the 30-day support zone ($11.30–11.32). While RSI suggests equilibrium, the MACD histogram’s 0.1158 value hints at a potential short-term rebound. However, the 200-day MA at $16.215 remains a distant target, and the -94 P/E ratio signals structural weakness. With sector leader DOW down 19.34%, the risk of a prolonged selloff is elevated.

Top Options:
• HUN20250815P10 (Put): Strike $10, Expiry 8/15, IV 65.15%, Leverage 30.93%, Delta -0.2887, Theta -0.0172, Gamma 0.1925, Turnover $9,875
- IV: Elevated volatility aligns with bearish scenario
- Leverage: 30.93% amplifies downside gains
- Delta: -0.2887 indicates moderate sensitivity to price drops
- Gamma: 0.1925 ensures responsiveness to further declines
- Turnover: High liquidity ensures trade execution
- Payoff: At 5% downside to $10.30, payoff = $0.30 per share
- Rationale: Positioned to capitalize on a potential $10.13 support breakdown with strong liquidity and volatility.
• HUN20250919P11 (Put): Strike $11, Expiry 9/19, IV 60.01%, Leverage 9.41%, Delta -0.4823, Theta -0.0111, Gamma 0.1521, Turnover $7,180
- IV: Mid-range volatility supports bearish thesis
- Leverage: 9.41% offers controlled exposure
- Delta: -0.4823 balances sensitivity and stability
- Gamma: 0.1521 provides moderate price responsiveness
- Turnover: Sufficient liquidity for entry/exit
- Payoff: At 5% downside to $10.30, payoff = $0.70 per share
- Rationale: Strikes a balance between near-term liquidity and moderate leverage for a sustained bearish move.

Trading Insight: Aggressive bears should prioritize HUN20250815P10 for a sharp $10.13 target, while HUN20250919P11 offers a safer play on a gradual decline. If $10.13 breaks, the 52-week low becomes a critical inflection point.

Backtest Huntsman Stock Performance
The backtest of HUN's performance after an intraday plunge of -10% shows a significant positive return. The strategy's CAGR is 16.38%, with an excess return of 24.01% compared to the benchmark. The maximum drawdown was 0%, indicating that the strategy effectively recovered from the -10% plunge.

Is This the Bottom or the Precipice? Immediate Action Required
Huntsman’s 10.15% collapse has exposed a fragile balance sheet and sector-wide headwinds, but the 52-week low at $10.13 may offer a strategic entry point for contrarian buyers. With DOW’s 19.34% drop amplifying bearish sentiment, investors must weigh the risk of further declines against potential rebounds. The MACD’s 0.1158 divergence and RSI’s 60.05 level suggest short-term stabilization, but the -94 P/E ratio signals deeper structural issues. Act now: Monitor the $10.13 support and DOW’s performance—break below $10.13 could trigger a 200-day MA retest at $16.215, but only for those with a high-risk tolerance.