Critical Metals Plummets 13% Amid Geopolitical Shifts and Sector Volatility

Summary
• Critical Metals (CRML) slumps 13.02% to $13.07, erasing $2B in market cap
• Intraday range of $11.88–$13.39 highlights sharp volatility
• U.S.-China trade deal eases rare earth supply fears, triggering sector-wide sell-off
• Turnover surges to 17.99M shares, 40% of float

CRML’s abrupt decline reflects a dramatic shift in market sentiment as the U.S.-China trade truce dampens speculative bets on rare earth stocks. With the sector reeling from reduced geopolitical tensions, investors are reassessing exposure to critical minerals amid evolving supply dynamics.

Trade Truce Unwinds Rare Earth Geopolitical Bets
The U.S.-China trade deal, announced ahead of the APEC summit, has recalibrated market expectations for rare earth supply chains. Investors who had positioned for prolonged trade tensions—driving up CRML’s valuation amid U.S. government stake rumors and strategic offtake agreements—are now unwinding long positions. The deal’s potential to pause U.S. tariffs and Chinese export curbs has reduced perceived supply risks, directly undermining CRML’s recent momentum. This shift aligns with broader sector weakness, as companies like MP Materials (-7.2%) and USA Rare Earth (-6.5%) also face downward pressure.

Rare Earth Sector Reels as Trade Truce Unwinds Geopolitical Bets
The rare earth sector, historically buoyed by U.S.-China tensions, is experiencing a synchronized correction. CRML’s 13% drop mirrors declines in peers like MP Materials (-7.2%) and Trilogy Metals (-6.5%), reflecting a sector-wide reassessment of geopolitical-driven valuations. The trade deal’s focus on stabilizing supply chains has reduced the premium on U.S. rare earth producers, which had previously traded at significant discounts to Chinese processors. This correction underscores the sector’s vulnerability to macroeconomic shifts beyond operational fundamentals.

Bearish Options Play and Technical Divergence Signal Short-Term Volatility
• MACD: 2.36 (below signal line 3.01) → bearish crossover
• RSI: 54.08 → neutral but trending lower
• Bollinger Bands: CRML at 13.07 vs. middle band 14.74 → oversold
• 200D MA: 4.85 (far below current price) → long-term bullish divergence

CRML’s technical profile suggests a short-term bearish bias despite long-term structural tailwinds. Key support levels at $12.5 (20D MA) and $11.88 (intraday low) could trigger further selling. The options chain reveals two high-conviction bearish plays:

• CRML20251031P13
- Put option, strike $13, expiring 2025-10-31
- IV: 153.60% (elevated volatility)
- Delta: -0.427 (moderate sensitivity)
- Theta: -0.057 (slow time decay)
- Gamma: 0.139 (responsive to price moves)
- Turnover: $46,649 (liquid)
- Leverage: 13.08% (high reward potential)
- Payoff at 5% downside: $0.93 (max(0, 13 - 12.42))
- Why: High IV and leverage amplify gains in a 5% drop scenario, with gamma ensuring responsiveness to further declines.

• CRML20251107P13
- Put option, strike $13, expiring 2025-11-07
- IV: 177.09% (extreme volatility)
- Delta: -0.415 (moderate sensitivity)
- Theta: -0.045 (slow decay)
- Gamma: 0.0919 (modest responsiveness)
- Turnover: $71,302 (high liquidity)
- Leverage: 8.47% (balanced risk/reward)
- Payoff at 5% downside: $0.93 (max(0, 13 - 12.42))
- Why: Extended expiration and high IV create a time-insensitive bearish play, ideal for a prolonged correction.

Action: Aggressive bears should prioritize CRML20251031P13 for immediate downside capture, while CRML20251107P13 offers a safer, time-extended alternative. Watch for a breakdown below $12.5 to validate the bearish case.

Backtest Critical Metals Stock Performance
It looks like we hit a data-retrieval error when I tried to pull CRML’s daily OHLC prices (needed to identify each –13 % intraday plunge). To move forward smoothly, could you please confirm two points:1. Definition of “–13 % intraday plunge” – Most studies flag a day as an “intraday plunge” if that day’s LOW price is at least 13 % below the previous day’s CLOSE (regardless of the eventual close). – Is this interpretation acceptable, or do you prefer a different rule (e.g., OPEN→LOW or CLOSE-to-CLOSE drop)?2. Scope of the test – I plan to run the event study from 2022-01-01 through today (2025-10-27) on CRML.O, holding each trade for a configurable number of days (we can optimise or fix, say, 1-, 3-, 5-, 10-, 20-day windows). – Any risk-control limits (stop loss, take profit, max holding days) you’d like applied, or keep it unconditional for now?Once you confirm (or adjust) these points, I’ll retry the data pull with the correct parameters and continue with the event backtest.

Critical Metals Faces Crucial Crossroads: Watch for $12.5 Support and Sector Catalysts
CRML’s 13% drop signals a pivotal moment for the stock, balancing short-term bearish momentum against long-term structural demand for rare earths. While the U.S.-China trade truce has dampened speculative fervor, the sector’s strategic importance in defense and clean energy remains intact. Investors should monitor the $12.5 level as a critical support; a break below this could trigger a retest of the 52W low at $1.23. Meanwhile, sector leaders like MP Materials (-7.2%) highlight the vulnerability of geopolitical-driven valuations. For CRML, the path forward hinges on execution of its Greenland project and potential U.S. government partnerships. Act now: Position for a $12.5 breakdown or pivot to longs if the Tanbreez project secures $50M in funding.