SQM Surges 5.14% Amid Lithium Sector Volatility: Can This Momentum Sustain?

Summary
• SQM’s intraday price jumps 5.14% to $46.535, nearing 52W high of $47.51
• Itau BBA reinstates Outperform rating with $55 target, contrasting BofA’s $43.50 Underperform
• Lithium sector leader ALB (Albemarle) gains 5.61%, signaling sector-wide optimism
• Options chain shows high leverage and volatility in near-term contracts

Sociedad Quimica y Minera (SQM) is surging on a mix of regulatory optimism and sector-wide lithium demand shifts. With a 5.14% intraday gain, the stock is testing key technical levels as analysts and traders recalibrate positions. The lithium sector’s broader rally, led by ALB’s 5.61% rise, underscores a strategic inflection point for SQM’s market narrative.

Regulatory Uncertainty and Production Halt Fuel Optimism
SQM’s sharp intraday rally stems from a confluence of factors: Itau BBA’s reinstated Outperform rating, a 20% year-to-date return despite lithium supply-side volatility, and news of Chinese lithium production halts. The firm’s Q2 earnings beat (EPS $0.79 vs. $0.58) and revenue surge ($2.08B vs. $1.08B) further bolstered sentiment. However, BofA’s $43.50 target (vs. Itau’s $55) highlights divergent views on near-term lithium pricing dynamics. The Codelco agreement approval remains a critical catalyst, while supply surplus risks in 2025-2026 linger.

Lithium Sector Rally Gains Momentum as ALB Leads Charge
The lithium sector is surging on renewed demand for EV and energy storage materials. ALB (Albemarle), SQM’s sector leader, is up 5.61% intraday, reflecting broader industry optimism. SQM’s 5.14% gain aligns with sector momentum but trails ALB’s performance, suggesting divergent market positioning. Analysts note SQM’s low-cost production edge but caution about near-term supply overhangs, contrasting with ALB’s diversified lithium projects.

Options and ETFs: Leveraging Volatility in a Ranging Market
• 200-day MA: $38.18 (below current price); RSI: 44.77 (neutral); MACD: 1.30 (bearish divergence)
• Bollinger Bands: Price at $46.535 (above middle band $44.93), suggesting short-term overbought conditions
• Key support/resistance: 30D support at $45.60–$45.83; 200D resistance at $38.49–$38.82

Traders should focus on $45.60–$46.65 as the immediate range. A break above $46.65 (intraday high) could target $47.51 (52W high), while a drop below $45.53 (intraday low) may trigger a test of $44.93 (Bollinger middle band).

Top Options Picks:
• SQM20250919C45 (Call): Strike $45, Expiry 9/19, IV 34.79%, Leverage 19.48%, Delta 0.725, Theta -0.124, Gamma 0.101, Turnover 2,400
- High liquidity and moderate IV make this ideal for a bullish breakout. A 5% upside (to $48.86) yields a payoff of $3.86/share.
• SQM20251017C50 (Call): Strike $50, Expiry 10/17, IV 33.95%, Leverage 44.52%, Delta 0.317, Theta -0.036, Gamma 0.065, Turnover 15,500
- High leverage and strong gamma position this for a mid-term rally. A 5% upside (to $48.86) yields a $0.86/share payoff, but it’s better suited for a longer hold.

Aggressive bulls may consider SQM20250919C45 into a breakout above $46.65, while conservative traders might target SQM20251017C50 for a mid-term play on Itau’s $55 target.

Backtest Sociedad Quimica y Minera de Chile Stock Performance

SQM’s Rally Hinges on Codelco Approval and Lithium Pricing
SQM’s momentum is a high-stakes bet on regulatory clarity and lithium pricing recovery. Traders should monitor the Codelco agreement approval and Chinese supply-side developments. A sustained close above $46.65 could validate Itau’s $55 target, while a breakdown below $45.53 may trigger a retest of $44.93. Meanwhile, sector leader ALB (up 5.61%) offers a benchmark for broader industry sentiment. Position sizing and stop-loss placement near $45.60 are critical as volatility remains elevated.