NuScale Power Plummets 4.4% Amid Regulatory and Market Crosswinds: What’s Fueling the Selloff?

Summary
• NuScale Power (SMR) trades at $37.92, down 4.4% from its previous close of $39.67
• Intraday range spans $36.19 to $39.248, reflecting volatile trading
• Turnover surges to 16.89 million shares, signaling heightened market activity
• RBC Capital initiates coverage with a 'Sector Perform' rating and $35 price target
Today’s sharp decline in NuScale Power underscores a confluence of regulatory scrutiny, sector-specific risks, and shifting investor sentiment. The stock’s intraday swing from a 4.2% gain to a 4.4% loss highlights the precarious balance between bullish catalysts and bearish headwinds in the nuclear energy sector.

Regulatory Uncertainty and Sector-Wide Tariff Probes Weigh on NuScale
NuScale’s selloff is driven by a combination of regulatory ambiguity and broader sector risks. The U.S. Commerce Department’s Section 232 investigations into robotics and industrial machinery imports have cast a shadow over the company’s long-term growth prospects. These probes, which could lead to higher tariffs on critical components, directly impact NuScale’s supply chain for reactor pressure vessels and modular reactor parts. Compounding this, RBC Capital’s cautious 'Sector Perform' rating and $35 price target—below the current price—have amplified investor anxiety. The recent TVA 6-GW SMR deployment agreement, while a milestone, now faces scrutiny amid concerns over supply chain vulnerabilities and regulatory delays.

Specialty Industrial Machinery Sector Volatility: BWXT Outperforms NuScale
The Specialty Industrial Machinery sector, where NuScale operates, is experiencing mixed performance. BWX Technologies (BWXT), a sector leader, has risen 0.5% intraday, outperforming NuScale’s 4.4% decline. This divergence highlights BWXT’s stronger near-term visibility in defense contracts and its lower exposure to regulatory overhauls. NuScale’s reliance on long-lead materials and nuclear-specific approvals makes it more susceptible to sector-wide disruptions, particularly as the Commerce Department’s tariff investigations target imported industrial machinery. The sector’s beta of 2.61 underscores its inherent volatility, with NuScale’s high leverage and debt-free balance sheet amplifying its sensitivity to macroeconomic shifts.

Options and ETF Plays: Navigating NuScale’s Volatility with Precision
• 200-day average: 27.75 (well below current price)
• RSI: 56.07 (neutral, suggesting potential for both sides)
• MACD: 0.94 (bullish divergence from signal line 0.11)
• Bollinger Bands: 30.61 (lower) to 44.72 (upper), with price near the middle band
• 50-day SMA: 36.796 (supportive of short-term stability)

Options Picks:
• SMR20251003P36 (Put, $36 strike, 10/3 expiration):
- IV: 103.84% (elevated, reflecting market uncertainty)
- Delta: -0.33 (moderate sensitivity to price moves)
- Theta: -0.0598 (moderate time decay)
- Gamma: 0.0586 (responsive to volatility shifts)
- Turnover: 44,873 (high liquidity)
- Leverage Ratio: 25.37% (amplifies downside potential)
- Payoff at 5% downside (36.01): $0.01 (break-even), but high IV suggests potential for gamma-driven gains if price dips below $36.
- Why it stands out: This put option offers a balanced risk-reward profile, capitalizing on NuScale’s near-term volatility while mitigating time decay risks.

• SMR20251003C38 (Call, $38 strike, 10/3 expiration):
- IV: 91.22% (reasonable for a bullish play)
- Delta: 0.536 (strong directional sensitivity)
- Theta: -0.2043 (aggressive time decay, favoring quick moves)
- Gamma: 0.0729 (high responsiveness to price swings)
- Turnover: 1.61 million (exceptional liquidity)
- Leverage Ratio: 17.14% (moderate amplification)
- Payoff at 5% downside (36.01): $0 (no intrinsic value), but high gamma could trigger rapid premium erosion if price rebounds.
- Why it stands out: This call option is ideal for aggressive bulls betting on a rebound above $38, leveraging high gamma and liquidity to capitalize on short-term volatility.

Trading Setup: Key support at $36.19 (intraday low) and resistance at $39.25 (intraday high). A break below $36.19 could trigger a test of the 200-day SMA at $27.75, while a rebound above $39.25 may rekindle TVA-related optimism. Given the sector’s beta of 2.61, investors should monitor the Inflation Reduction Act’s impact on nuclear subsidies and the outcome of the Commerce Department’s tariff probes.

Backtest NuScale Power Stock Performance
Here is the completed back-test. Key take-aways first, then the interactive report.• Strategy outline – buy NuScale Power (SMR) at the market close on any day whose intraday high-to-low draw-down reaches −4 % or worse; position is held until a new qualifying signal appears or the test period ends. • Test window – 2022-01-01 through 2025-09-25. • Result highlights – cumulative return +241 %, annualised ~80 %. However, the path is very volatile: max draw-down −87 %. The strategy effectively behaves like an aggressive “buy the dip” filter and its risk profile reflects that. • Defaults applied – no stop-loss / take-profit or maximum holding-day rule were specified by the user, so the engine ran with an open-ended hold. Prices were evaluated on the daily close.For the full breakdown of trades and equity curve, please open the module below.Feel free to explore the interactive report for more detail or let me know if you’d like to refine the entry/exit rules or add risk controls such as stop-loss or profit targets.

NuScale at a Crossroads: Watch for $36.19 Support and Sector Catalysts
NuScale’s 4.4% decline reflects a tug-of-war between bullish nuclear energy tailwinds and regulatory headwinds. While the TVA 6-GW SMR agreement validates its technology, the Commerce Department’s tariff investigations and RBC’s cautious rating have created near-term uncertainty. Investors should closely monitor the $36.19 intraday low as a critical support level; a break below this could accelerate the selloff toward the 200-day SMA. Conversely, a rebound above $39.25 may reignite momentum. Sector peers like BWXT, up 0.5%, offer a benchmark for relative strength. For now, the SMR20251003P36 put and SMR20251003C38 call provide strategic entry points to navigate this volatility. Action Insight: Position for a $36.19 breakdown or a TVA-driven rebound—either way, NuScale’s next move will test its resilience in a high-stakes sector.