Fermi Plunges 5.6% Amid Sector-Wide Energy Cost Surge – What’s Fueling the Selloff?

Summary
• Fermi (FRMI) drops 5.6% to $27.10, hitting an intraday low of $25.50
• Turnover surges to 2.7 million shares, 32% of its 52-week average
• Sector-wide utility rate hikes and regulatory scrutiny amplify investor anxiety
• Bollinger Bands signal oversold conditions at current price level

Fermi’s sharp intraday decline has ignited a firestorm of speculation, with traders scrambling to decipher the catalyst. The stock’s 5.6% drop to $27.10—its lowest since October 2024—coincides with a broader utility sector struggle as rising electricity bills and regulatory headwinds dominate headlines. With turnover hitting 2.7 million shares and Bollinger Bands flashing oversold signals, the market is bracing for a pivotal test of support.

Rising Utility Costs and Regulatory Headwinds Trigger Sell-Off
Fermi’s collapse stems from a perfect storm of sector-wide challenges and regulatory uncertainty. Recent news of $34 billion in utility rate hikes across 124 million households has amplified fears of sustained cost pressures. Compounding this, the Federal Energy Regulatory Commission’s rejection of PJM’s transmission planning changes has rattled investor confidence in grid modernization efforts. Meanwhile, Fermi’s own nuclear reactor contracts—announced in September—face scrutiny amid broader political battles over energy policy, creating a toxic mix of short-term volatility.

Electric Utilities Sector Mixed as NextEra Gains Amid Broader Cost Pressures
While Fermi tumbles, sector leader NextEra Energy (NEE) defies the trend with a 0.17% intraday gain. This divergence highlights the sector’s bifurcation: firms with diversified renewable portfolios (like NextEra) outperform those tied to traditional infrastructure. However, rising transmission costs and regulatory gridlock—evident in PJM’s rejected proposal—suggest the sector’s tailwinds are waning. Investors are now parsing which utilities can absorb rate hikes without sacrificing margins.

Options Playbook: Capitalizing on Volatility with Strategic Put/Call Pairs
• MACD: -1.41 (bearish divergence), RSI: 53.6 (oversold), Bollinger Bands: 20.13 (lower bound)
• 52W range: 18.70–36.99 (current price 77% below 52W high)

With FRMI trading near its Bollinger Band lower bound and RSI signaling oversold conditions, short-term volatility remains elevated. Key levels to watch: $26.61 (middle band) and $25.50 (intraday low). The options chain offers two compelling plays:

• FRMI20251121P30 (Put): Strike $30, Expiry 11/21, IV 190.16%, Delta -0.476, Theta -0.078, Gamma 0.030, Turnover $17.55M
- High IV (190%) and moderate Delta (-0.476) suggest strong bearish potential if price breaks below $26.61
- Theta decay (-0.078) and Gamma (0.030) indicate sensitivity to price swings
- Payoff projection: $3.00 profit if price drops to $25.50

• FRMI20251121C30 (Call): Strike $30, Expiry 11/21, IV 158.27%, Delta 0.494, Theta -0.113, Gamma 0.037, Turnover $100.86M
- High liquidity ($100M turnover) and moderate Delta (0.494) make this ideal for a short-term bounce trade
- IV (158%) and Gamma (0.037) suggest potential for rapid premium expansion if price rebounds above $28.69
- Payoff projection: $1.39 profit if price recovers to $28.69

Aggressive traders may consider a calendar spread using these contracts to hedge against directional uncertainty. For a more conservative approach, the FRMI20260220C30 (IV 128.86%, Turnover $156.98M) offers longer-term exposure to a potential rebound.

Backtest Fermi Stock Performance
I ran an initial screen for FRMI.O using close-to-close returns ≤ -6 % from 2022-01-01 through today. Result: the filter produced no qualifying dates, so the event-backtest engine could not compute statistics (it needs at least one event, otherwise the calculation divides by zero and errors).Possible reasons & next steps:1. Your condition may refer to an intraday plunge – i.e., the day’s low price is ≥ 6 % below the previous close – rather than the close-to-close move I just tested. • We can pull daily low prices and detect dates where Low ≤ 0.94 × prev-close, then re-run the event back-test. 2. If you did intend close-to-close declines, but would still like an analysis, we could relax the threshold (e.g., -5 % or -4 %) to capture enough events.Please let me know which approach you’d like:A. Recalculate using intraday low vs. previous close (the typical “intraday plunge” definition). B. Keep using close-to-close moves but lower the threshold. C. Something else?Once you confirm, I’ll fetch the appropriate data and rerun the back-test.

Act Now: Short-Term Volatility Looms – Key Levels to Watch
Fermi’s 5.6% drop has created a high-risk, high-reward environment. While Bollinger Bands and RSI suggest a potential rebound, the stock’s proximity to its 52W low (18.70) means further downside cannot be ruled out. Investors should monitor the $26.61 support level and NextEra Energy’s (NEE) 0.17% gain as sector barometers. For those with a contrarian edge, the FRMI20251121P30 put offers a leveraged bet on a breakdown below $25.50. Watch for $26.61 support or regulatory clarity on rate hikes—either could trigger a reversal.