LAC Plummets 10% Amid DOE Loan Hype: What's Fueling the Selloff?

Summary
• Lithium Americas (LAC) plunges 10.23% to $6.032, its lowest since October 2024
• $435M DOE loan drawdown announced, yet shares trade below 52-week high of $10.52
• Intraday range of $5.92–$6.53 highlights sharp volatility amid mixed sector sentiment

Today’s selloff in LAC defies the bullish narrative of U.S. government support, as investors weigh execution risks against long-term lithium demand. The stock’s collapse to 18-month lows underscores fragile sentiment, even as the DOE loan signals strategic importance for domestic EV supply chains.

DOE Loan Hype Collides with Execution Risks
The $435 million loan drawdown from the U.S. Department of Energy, part of a $2.23 billion financing package for Thacker Pass, initially buoyed optimism. However, LAC’s 10.23% intraday drop reflects skepticism about project execution. Analysts highlight unprofitability, environmental hurdles, and the need for $256 million in capitalized interest. The stock’s sharp decline also coincides with broader lithium sector jitters, as mixed signals from the Trump administration and global supply concerns cloud near-term prospects.

Lithium Sector Volatility Amplifies LAC's Downturn
The lithium sector remains in flux, with Albemarle (ALB) down 8.52% despite its role in the DOE loan program. Sector-wide, Rothschild & Co. notes a cyclical bottom in lithium prices, but oversupply risks persist. LAC’s 10% drop outpaces peers like SQM, which faces regulatory headwinds in Chile. The sector’s mixed performance underscores the delicate balance between U.S. policy tailwinds and global supply chain uncertainties.

Options Playbook: Capitalizing on Volatility with LAC20251121P6 and LAC20251121C5.5
• RSI: 39.25 (oversold)
• MACD: 0.5086 (bearish divergence)
• Bollinger Bands: $5.19–$9.85 (current price near lower band)
• 200D MA: $3.40 (far below current price)

LAC’s technicals suggest a short-term oversold condition, but structural risks remain. Key levels to watch: $5.92 (intraday low) and $6.50 (open). The Sprott Lithium Miners ETF (SLL) is not available, but options on LAC offer high leverage. Two top options:

• LAC20251121P6 (Put):
- IV: 107.33% (high volatility)
- Leverage: 9.32% (moderate)
- Delta: -0.4266 (sensitive to price drops)
- Theta: -0.008082 (slow time decay)
- Gamma: 0.2261 (responsive to price swings)
- Turnover: $17,008 (liquid)
- Payoff at 5% downside: $0.47 (max(0, $6.50 - $6.032) = $0.468)
- Why: High IV and delta position this put to capitalize on a sharp drop.

• LAC20251121C5.5 (Call):
- IV: 101.89% (high volatility)
- Leverage: 6.37% (low)
- Delta: 0.6915 (strong directional bias)
- Theta: -0.016153 (moderate decay)
- Gamma: 0.2138 (responsive to rallies)
- Turnover: $140,845 (highly liquid)
- Payoff at 5% downside: $0.00 (max(0, $6.032 - $5.50) = $0.532)
- Why: High delta and liquidity make this call ideal for a rebound above $6.50.

Action: Aggressive bulls may consider LAC20251121C5.5 into a bounce above $6.50, while bears should monitor LAC20251121P6 for a breakdown below $5.92.

Backtest Lithium Stock Performance
The historical “–10 % intraday low” shock has occurred 29 times for Lithium Americas (LAC.N) since 2022. Event-study back-testing indicates:• Short-term (1-5 trading days) rebounds are mild and inconsistent; win-rate ~40-52 %, average lift <3 %. • Beyond day 10, performance drifts lower; by day 30 the average draw-down reaches –9 %, with win-rate only 23 %. • None of the horizons tested show statistically significant out-performance versus a passive hold.A fully interactive report is available below.You can explore win-rates, cumulative returns and day-by-day stats through the embedded dashboard.

Bullish Breakout or Bearish Breakdown? Watch These Levels
LAC’s 10% drop has pushed it near critical support at $5.92, but the 52-week low of $2.31 remains a distant floor. Technicals suggest a short-term oversold condition, but structural risks—like project delays and lithium price volatility—loom large. Investors should monitor the $6.50 level for a potential rebound or the $5.92 low for a breakdown. Sector leader Albemarle (ALB), down 8.52%, could offer clues on broader sentiment. Act now: Position in LAC20251121P6 for a bearish play or LAC20251121C5.5 for a bullish rebound, but brace for a volatile path ahead.