Teck Resources Plunges 5.34%: Can This Copper Giant Weather the Storm?

Summary
• Teck Resources (TECK) crashes to $33.15 intraday low, down 5.34% from $35.12 close
• JPMorgan downgrades TECK to Neutral with $41 price target, citing QB2 project delays
• Copper prices hover near $5.78/lb amid 50% US tariff loom, yet refined market surplus concerns persist

Teck Resources’ stock has plunged to its lowest point since April 2024, trading at $33.245 by 7:14 PM ET. The selloff follows a JPMorgan downgrade, operational challenges at key projects, and sector-wide uncertainty over copper demand amid impending US tariffs. The stock’s 8.7% drop far outpaces the S&P Metals & Mining ETF’s 1.5% decline, raising questions about whether this is a buying opportunity or a red flag.

JPMorgan Downgrade and Production Hurdles Trigger Sharp Drop
Teck Resources’ collapse stems from a confluence of bearish catalysts. JPMorgan’s downgrade to Neutral—from Overweight—highlighted risks around QB2 project execution, including TMF upgrades, throughput consistency, and weather disruptions. Meanwhile, the company’s own news revealed $1.1 billion in shareholder returns but also $2.1–2.4 billion in capital outlays for the Highland Valley mine extension. Compounding this, the QB mine’s ship loader outage until 2026 and safety incidents at Antamina further eroded investor confidence. These factors created a perfect storm, amplifying fears about Teck’s ability to balance capital-intensive projects with shareholder returns.

Copper Sector Volatility as TECK Outperforms ETF Decline
The broader copper sector remains mixed, with the S&P Metals & Mining ETF down 1.5% as of 7:14 PM ET. Teck’s 8.7% drop far exceeded the ETF’s selloff, reflecting its unique challenges. While copper prices near $5.78/lb—up 40% year-to-date—structural issues like the US-China trade talks and a 97,000-ton global surplus in May have dampened sentiment. Northern Dynasty’s 55% plunge and Argentina’s mining export ambitions underscore the sector’s fragmented outlook, but Teck’s operational and project-specific risks have made it the day’s standout underperformer.

Options Playbook: Navigating the Bearish Downturn
• MACD: -0.342 (bearish), RSI: 24.14 (oversold), 200D MA: $41.10 (far above price)
• Bollinger Bands: Price at $33.245 near lower band ($35.69), signaling extreme volatility
• Turnover Rate: 1.82% (healthy, but not exceptional)

Top Options Contracts:
• TECK20250801P32.5 (Put Option):
- Strike: $32.5, Expiry: 2025-08-01, IV: 37.07%, Delta: -0.325, Theta: -0.0074, Gamma: 0.197, Turnover: $6,446
- IV (high): Implied volatility suggests strong bearish expectation
- Delta (moderate): Sensitive to price moves without overexposure
- Gamma (high): Amplifies gains if price drops further
- Turnover (high): Liquid for entry/exit
- Payoff for 5% downside (target $31.58): $0.92/share profit. This put is ideal for capitalizing on short-term bearish momentum with balanced risk.

• TECK20250801P31 (Put Option):
- Strike: $31, Expiry: 2025-08-01, IV: 40.18%, Delta: -0.112, Theta: -0.0121, Gamma: 0.096, Turnover: $391
- IV (elevated): Reflects deep bearish sentiment
- Delta (low): Less sensitive to price swings, suitable for long-term bearish bets
- Theta (high): Time decay favors short-term moves
- Payoff for 5% downside: $2.08/share profit. This option offers asymmetric reward for aggressive bears betting on a $30+ price test.

Trading Setup: Key support levels at $32.5 (TECK20250801P32.5) and $31 (TECK20250801P31) are critical. With RSI at oversold levels and MACD trending downward, a breakdown below $32.5 could trigger a cascade to $30. The options chain’s liquidity and implied volatility suggest institutional bearish positioning. Aggressive short-term players may target the $32.5 put, while long-term bears should monitor the $31 put for a potential 5% downside reward.

Backtest Teck Resources Stock Performance
Backtesting the performance of Teck Resources (TECK) after a -5% intraday plunge shows a generally favorable short-term outlook, with positive returns in the immediate aftermath of the drop. Here's a detailed analysis based on the backtest data:1. Short-Term Gains: Following a -5% intraday plunge, TECK exhibited a 3-day win rate of 51.72%, indicating that over half of the time, the stock price recovered and gained value within 3 days of the plunge.2. Cumulative Returns: The 10-day win rate was even higher, at 62.16%, suggesting that a larger proportion of the time, the stock price showed positive gains within 10 days of the plunge.3. Maximum Return: The maximum return observed during the backtest period was 7.64%, which occurred on the third day after the plunge. This highlights that while the stock price had a strong recovery, the potential for large gains was somewhat limited.4. Probability of Recovery: The backtest data shows that there was an 84.47% probability of the stock price recovering within 10 days of the plunge, which is a reassuring indicator for investors looking to hold their position through a short-term volatility.

Position for the Downturn: Key Levels to Watch
Teck Resources’ sharp decline reflects a mix of operational headwinds, project execution risks, and sector-wide uncertainty. With the stock trading near its 52-week low of $28.32 and technical indicators (RSI, MACD) signaling bearish momentum, the immediate outlook remains challenging. The options market’s elevated implied volatility and put options’ liquidity suggest institutional bearish positioning. For now, watch the $32.5 and $31 support levels—breakdowns could trigger further selloff. Meanwhile, sector leader Freeport-McMoRan (FCX) is up 0.73%, highlighting the divergence in copper stocks. Traders should prioritize short-term puts like TECK20250801P32.5 for a potential 5% downside reward. Position now, or risk missing the window as liquidity thins ahead of the 50% US tariff implementation on August 1.