LAC Plummets 10.5% Amid Regulatory Uncertainty and Volatile Options Activity – What’s Next?

Summary
• Lithium Americas (LAC) plunges 10.5% to $5.6653, erasing Wednesday’s 95% surge on U.S. equity stake news.
• Intraday range of $5.51–$6.38 highlights extreme volatility as traders grapple with regulatory and financial uncertainty.
• Options chain shows 137.66% implied volatility on October 17th $5.5 puts, signaling bearish positioning.
• Sector peers like Albemarle (ALB) dip 1.29%, while Sigma Lithium jumps 7.2%, reflecting mixed industrial metals sentiment.

Today’s dramatic selloff in LAC underscores the precarious balance between geopolitical ambition and market skepticism. The U.S. government’s proposed 10% equity stake in Thacker Pass, once a catalyst for a historic 95% rally, now faces regulatory hurdles and shareholder concerns. With a 19.97% turnover rate and a -29.57 dynamic P/E, the stock’s technicals and fundamentals are at a crossroads. Traders are now parsing options data and sector dynamics to gauge the next move.

U.S. Equity Stake Proposal Sparks Regulatory and Market Uncertainty
The sharp reversal in LAC’s fortunes stems from the U.S. government’s proposal to take a 10% equity stake in Thacker Pass, a move initially celebrated as a strategic win. However, the administration’s request for a cash buffer through equity dilution has raised red flags. Canadian regulatory approval remains pending, and the 38% stake held by General Motors (GM) introduces complexity. The Department of Energy’s loan renegotiation—delayed by unmet disbursement conditions—has further muddied the outlook. Investors are now weighing the risk of regulatory delays against the potential for a government-backed project, with the stock’s -10.5% drop reflecting a shift from euphoria to caution.

Industrial Metals Sector Volatility as LAC Dives, ALB Holds Steady
While LAC’s 10.5% decline is extreme, the broader industrial metals sector shows mixed signals. Albemarle (ALB), the sector leader, trades down 1.29%, indicating cautious sentiment. Sigma Lithium, however, gains 7.2%, suggesting some buyers see value in lithium’s long-term fundamentals. The sector’s 52-week high of $7.53 for LAC contrasts with its current price, highlighting the gap between strategic optimism and market reality. The Thacker Pass project’s projected 2028 production timeline adds to the sector’s long-term uncertainty, as investors balance near-term risks against decarbonization-driven demand.

Options Playbook: Capitalizing on LAC’s Volatility with High-Leverage Contracts
• MACD: 0.732 (bullish), Signal Line: 0.320, Histogram: 0.412 (positive divergence)
• RSI: 76.58 (overbought), 200D MA: $2.97 (far below current price)
• Bollinger Bands: $6.22 (upper), $3.55 (middle), $0.87 (lower)

Top Options Contracts:
• LAC20251017P5.5 (Put):
- Strike: $5.50, Expiry: 2025-10-17
- IV: 137.66% (extreme bearishness), Delta: -0.3925 (moderate sensitivity), Theta: -0.0129 (moderate time decay), Gamma: 0.2015 (high sensitivity to price swings), Turnover: $217,861
- Why it stands out: High implied volatility and gamma make this put ideal for a 5% downside scenario (projected price: $5.38). Payoff: max(0, $5.50 - $5.38) = $0.12 per share.
• LAC20251017C5.5 (Call):
- Strike: $5.50, Expiry: 2025-10-17
- IV: 122.32% (bullish potential), Delta: 0.6250 (high sensitivity), Theta: -0.0113 (moderate decay), Gamma: 0.1418 (responsive to price moves), Turnover: $152,002
- Why it stands out: High delta and IV position this call for a rebound above $5.50. Payoff under 5% upside (projected price: $5.95): max(0, $5.95 - $5.50) = $0.45 per share.

Trading Setup: Key support at $5.50 (October 17th put strike) and resistance at $6.21 (Bollinger upper band). Short-term traders should monitor the 10-day RSI (76.58) for overbought exhaustion and the 200D MA ($2.97) as a long-term floor. Aggressive bulls may consider the LAC20251017C5.5 into a bounce above $5.50, while bears should watch the $5.50 put for a potential breakdown.

Backtest Lithium Stock Performance
The event-level back-test is ready. Key observations:• 15 occurrences of intraday drawdowns ≥ 11 % since 2022 • Median return after 30 trading days: -11.8 % (vs S&P-500: -4.4 %), win-rate 26.7 % • No statistically significant out-performance on any holding window (1-30 days) – price action tends to weaken further after the plunge rather than mean-revert. Parameter notes (auto-filled):1. Intraday decline measured as (day-low − prior-close) / prior-close ≤ -0.11. 2. Holding-window analysis horizon set to the standard 30 days. 3. Close prices used for return calculation.You can explore the detailed interactive report below.

LAC at Pivotal Crossroads: Watch $5.5 Support and October Options Expiry for Clarity
LAC’s 10.5% drop has created a critical inflection point. The stock’s ability to hold above $5.50 will determine whether the U.S. equity stake narrative regains traction or if regulatory delays dominate. With October 17th options expiring, traders should focus on the $5.50 put and call strikes as liquidity hotspots. The sector leader, Albemarle (ALB), currently down 1.29%, offers a benchmark for broader industrial metals sentiment. Investors should also monitor General Motors’ (GM) stakeholder response and the Department of Energy’s loan conditions. For now, the path of least resistance appears bearish, but a rebound above $6.21 (Bollinger upper band) could reignite optimism. Action: Short-term traders should watch the $5.50 support level and October 17th options expiry for directional clarity.