BHP Group Plummets 2.63% Amid Sector Turbulence: What's Fueling the Selloff?

Summary
• BHP Group (BHP) trades at $59.315, down 2.63% from its $60.92 previous close
• Intraday range spans $59.23 to $60.99, with 1203896 shares traded
• 52-week high of $61.27 now 3.2% above current price
• Sector peers like Freeport-McMoRan (FCX) also underperform, down 1.87%

The metals and mining sector faces a perfect storm as BHP Group’s sharp intraday decline reflects broader industry jitters. With critical minerals funding announcements and copper demand pressures dominating headlines, investors are recalibrating positions. The stock’s 2.63% drop—its worst intraday performance since early 2025—highlights growing uncertainty in a sector poised for transformative shifts.

Sector-Wide Jitters Over Critical Minerals Funding and Copper Demand Pressures
BHP’s selloff aligns with sector-wide anxiety triggered by U.S. EXIM Bank’s $100B critical minerals investment pledge and Harmony Gold’s $1.6B copper expansion. While these developments signal long-term industry growth, they also raise short-term concerns about oversupply and regulatory overreach. Additionally, BHP’s recent $110M settlement for the 2015 Fundao dam disaster—though unrelated to current operations—has resurfaced environmental liabilities as a risk factor. The stock’s 2.63% drop reflects a flight to safety as investors weigh these macroeconomic and corporate-specific risks.

Metals and Mining Sector Volatility as BHP Trails Peers
The metals and mining sector is in disarray, with BHP’s 2.63% decline outpacing Freeport-McMoRan’s (FCX) 1.87% drop. Barrick Gold’s 52-week high ascent contrasts sharply with BHP’s weakness, highlighting divergent investor sentiment. While EXIM Bank’s $570M support for Alaska’s Graphite Creek project signals optimism for battery metals, BHP’s exposure to traditional commodities like copper and iron ore faces near-term headwinds. The sector’s mixed performance underscores a bifurcation between critical minerals beneficiaries and legacy miners.

Options and ETF Strategy Amid Elevated Volatility
• 200-day average: $51.8991 (well below current price)
• RSI: 90.88 (overbought territory)
• MACD: 1.26 (bullish divergence from signal line 0.5987)
• Bollinger Bands: Price at 59.315 near lower band (50.75) but far from middle band (56.04)
• Key support/resistance: 30D support at 55.08–55.25, 200D resistance at 55.54–55.95

BHP’s technicals suggest a volatile short-term outlook. The RSI’s overbought level and MACD’s bullish divergence hint at potential mean reversion, but the stock’s proximity to Bollinger Bands’ lower limit warns of further downside. Two options stand out:

• BHP20251219P57.5 (Put, $57.5 strike, 12/19 expiry):
- IV: 27.77% (moderate)
- LVR: 197.87% (high leverage)
- Delta: -0.2122 (moderate sensitivity)
- Theta: -0.0329 (significant time decay)
- Gamma: 0.1188 (high sensitivity to price swings)
- Turnover: 364 (liquid)
- Payoff at 5% downside: $2.265 (max profit if price drops below $57.5)
- This put offers asymmetric upside in a bearish scenario, leveraging high gamma and leverage ratio.

• BHP20251219C60 (Call, $60 strike, 12/19 expiry):
- IV: 26.46% (moderate)
- LVR: 91.32% (balanced leverage)
- Delta: 0.4007 (moderate directional bias)
- Theta: -0.0711 (aggressive time decay)
- Gamma: 0.1661 (high responsiveness)
- Turnover: 3004 (high liquidity)
- Payoff at 5% downside: $0 (out-of-the-money)
- This call is ideal for a rebound trade, capitalizing on high gamma and moderate delta for a potential bounce.

Aggressive bulls may consider BHP20251219C60 into a rebound above $59.315, while bears should eye BHP20251219P57.5 for a breakdown below $57.5.

Backtest BHP Group Stock Performance
The backtest of BHP's performance after an intraday plunge of -3% from 2022 to the present shows mixed results. While the 3-day win rate is 50.28%, indicating that half of the time the stock recovers within three days, the overall return during this period is only 0.04%. The 10-day win rate is slightly higher at 47.18%, but the return over 10 days is still relatively modest at 0.13%. The longest recovery period observed was 59 days, with a maximum return of 1.23% during the backtest period.

BHP at Pivotal Crossroads: Key Levels to Watch Before Year-End
BHP’s 2.63% drop signals a critical inflection point as the stock tests its 30D support at $55.08 and 200D range. The options market’s focus on the $57.5–$60 strike zone suggests a high probability of consolidation before year-end. With Freeport-McMoRan (FCX) down 1.87%, sector-wide caution persists, but BHP’s technicals hint at a potential rebound if the RSI corrects from overbought levels. Investors should monitor the 57.5 put for bearish confirmation and the 60 call for a short-covering rally. Act now: Watch for a breakdown below $55.25 or a breakout above $60.99 to define the next phase of this volatile trade.