Comstock Resources Plunges 13.27%, What’s Fueling the Sharp Selloff?

Summary
• Comstock Resources (CRK) opened at $20.415 but slumped to an intraday low of $18.01, marking a -13.27% drop.
• Q2 earnings beat estimates by 44.44%, yet UBS slashed its price target from $20 to $18, citing weak production forecasts.
• CRK fell below its 200-day moving average of $19.19, entering oversold territory with an RSI of 41.46.

Comstock Resources’ steep decline has captured market attention as technical breakdowns and bearish options activity amplify concerns. The stock’s 52-week range of $7.74–$31.1737 now faces critical support levels, with sector dynamics and analyst revisions adding layers of complexity to its near-term trajectory.

UBS Downgrade, Earnings Revisions, and Technical Breakdown
The sharp selloff in CRK stems from a confluence of bearish catalysts. UBS’ revised $18 price target—down from $20—reflects disappointment in Comstock’s Q2 production results, which fell short of forecasts. Meanwhile, the Zacks Rank 3 (Hold) designation highlights mixed earnings estimate revisions, with the industry’s low Zacks Industry Rank (bottom 31%) amplifying sector-wide headwinds. Technically, CRK’s breakdown below the 200-day moving average ($19.19) and key support at $18.20 triggered panic selling, exacerbated by a -1.17 MACD and RSI approaching oversold levels. The stock’s 52-week low of $7.74 now looms as a critical psychological threshold.

Energy Sector Volatility as Exxon Mobil (XOM) Stabilizes
While CRK’s -13.27% drop is extreme, the broader energy sector remains mixed. Exxon Mobil (XOM), the sector’s bellwether, posted a -0.11% intraday decline, contrasting with CRK’s selloff. Sector news underscores challenges: subsea contract bids and exploration cost pressures weigh on upstream players. However, CRK’s underperformance—despite its Q2 revenue beat—suggests investor skepticism about its leverage to natural gas prices and debt-laden balance sheet (debt-to-equity of 1.49). The sector’s 2.13% average operating margin further highlights CRK’s -2.13% margin as a red flag.

Options Volatility and ETF Positioning for CRK’s Near-Term Battle
• 200-day MA: $19.19 (below)
• RSI: 41.46 (oversold)
• MACD: -1.17 (bearish)
• Bollinger Bands: $19.68 (lower band), $22.35 (middle band)
• Key Support/Resistance: $18.20–$18.60 (200D support), $20.55–$20.75 (30D resistance)

CRK’s technical profile signals a high-probability short-term bear case. The stock’s 54.9M turnover (7.04% of float) and -1.17 MACD suggest momentum-driven selling. The 200-day MA at $19.19 is now a critical retest level; a break below $18.20 could accelerate the slide toward the 52-week low. Options data reinforces this: CRK20250815P18 (put option) and CRK20250919P18 (put) show high leverage (49.03% and 13.95%) and gamma (0.1998 and 0.1094), making them sensitive to price swings.

Top Option 1: CRK20250815P18
• Strike: $18, Exp: 2025-08-15
• IV: 52.03%, Leverage: 49.03%, Delta: -0.443, Theta: -0.0005, Gamma: 0.1998, Turnover: 2,653
• Payoff Calculation: At a 5% downside (ST = $17.13), payoff = max(0, $18 - $17.13) = $0.87 per share. With 2,653 contracts traded, this put could benefit from continued volatility.
• Why It Stands Out: High gamma ensures sensitivity to price drops, while moderate IV (52%) balances risk/reward. The -0.443 delta suggests it gains ~$0.44 for every $1 move below $18.

Top Option 2: CRK20250919P18
• Strike: $18, Exp: 2025-09-19
• IV: 53.00%, Leverage: 13.95%, Delta: -0.4329, Theta: -0.006, Gamma: 0.1094, Turnover: 58,207
• Payoff Calculation: At ST = $17.13, payoff = max(0, $18 - $17.13) = $0.87 per share. High turnover (58,207) ensures liquidity.
• Why It Stands Out: The longer expiration (September) offers time decay protection (-0.006 theta), while 0.1094 gamma ensures responsiveness to price swings. Ideal for a controlled bearish bet.

Trading Outlook: Aggressive shorts may target CRK20250919P18 if the $18.20 support breaks. For a balanced approach, CRK20250815P18 offers immediate leverage. Both options thrive in a 5%–10% downside scenario.

Backtest Comstock Resources Stock Performance
The 13% intraday plunge in CRK resulted in a 3-day win rate of 53.61%, a 10-day win rate of 54.43%, and a 30-day win rate of 56.56%. The maximum return during the backtest period was 10.61% over 30 days, indicating that CRK has a higher probability of positive returns in the short to medium term following a significant downturn.

CRK’s Critical Juncture: Watch $18.20 Support and Sector Sentiment
Comstock Resources’ near-term survival hinges on its ability to hold above $18.20. A breakdown could trigger a technical death spiral, with the 52-week low of $7.74 as the ultimate downside target. Investors should monitor the 200-day MA ($19.19) for a potential bounce but remain cautious on the stock’s weak balance sheet and sector positioning. The sector leader, Exxon Mobil (XOM), is only down -0.11%, suggesting CRK’s selloff is idiosyncratic rather than systemic. Action Step: Aggressive sellers may short CRK20250919P18 if $18.20 fails, while defensive traders should wait for a confirmed close above $19.19 before considering a long bias.