POSCO (PKX) Plunges 6.17% Amid Regulatory Scrutiny and Sector-Wide Downturn – What’s Next for the Steel Giant?

Summary
• POSCO (PKX) trades at $55.39, down 6.17% from its previous close of $59.03
• Intraday range: $55.20 (low) to $56.3161 (high)
• Turnover surges to 570,473 shares, with a 0.1887% turnover rate
• 52-week range: $39.40 (low) to $61.24 (high)

POSCO’s shares have plunged sharply in intraday trading, driven by a combination of sector-wide weakness and regulatory uncertainty. The stock’s collapse aligns with broader steel industry turbulence, as geopolitical and macroeconomic headwinds weigh on demand. With implied volatility spiking in options markets and technical indicators flashing caution, traders are scrambling to assess whether this selloff is a buying opportunity or a deeper correction.

Regulatory Uncertainty and Sector-Wide Weakness Fuel POSCO’s Selloff
POSCO’s 6.17% intraday decline is part of a broader selloff in the steel sector, exacerbated by regulatory scrutiny and macroeconomic headwinds. While the company’s recent joint venture with CNGR and FINO to advance lithium iron phosphate (LFP) cathode materials signals long-term growth ambitions, short-term concerns dominate. Elevated implied volatility in options (e.g., 90.48% for PKX20260220P40) reflects heightened uncertainty. Additionally, the steel sector faces pressure from slowing global demand and rising input costs, with peers like Commercial Metals Company (CMC) also underperforming. The lack of catalysts in POSCO’s recent news—coupled with a bearish technical setup—has amplified risk-off sentiment.

Steel Sector Suffers Broad Selloff as POSCO Trails Peers
POSCO’s -6.17% decline outpaces its steel sector peers, which are also underperforming. For example, Commercial Metals Company (CMC) fell 2.30%, while Steel Dynamics (STLD) dropped 0.88%. The sector’s weakness stems from a confluence of factors: slowing construction activity, rising interest rates, and regulatory scrutiny over environmental compliance. POSCO’s steeper decline suggests investor concerns about its exposure to cyclical demand and its ability to execute its LFP cathode venture amid a volatile market.

Options and ETF Strategies for Navigating POSCO’s Volatility
• 200-day MA: $51.126 (below current price)
• 30-day MA: $53.83 (below current price)
• RSI: 63.61 (neutral)
• MACD: 1.157 (bullish histogram)
• Bollinger Bands: Upper $59.17, Middle $53.98, Lower $48.79

POSCO’s technicals suggest a bearish near-term bias, with key support at $53.98 (middle Bollinger Band) and resistance at $59.17. The stock’s 6.17% drop has created high-conviction options opportunities. Two top picks from the options chain are:

• PKX20260220P55 (Put, $55 strike, Feb 20 expiration):
- Implied Volatility: 37.80% (moderate)
- LVR: 24.09% (high leverage)
- Delta: -0.437 (moderate sensitivity)
- Theta: -0.005 (low time decay)
- Gamma: 0.0599 (high sensitivity to price changes)
- Turnover: 460 (liquid)
- Why it stands out: This put option offers leveraged downside exposure with a favorable delta/gamma profile. A 5% move below $55.39 to $52.62 would yield a payoff of $2.38 per contract, aligning with the stock’s bearish technical setup.

• PKX20260220C60 (Call, $60 strike, Feb 20 expiration):
- Implied Volatility: 35.96% (moderate)
- LVR: 56.55% (high leverage)
- Delta: 0.271 (low sensitivity)
- Theta: -0.045 (moderate time decay)
- Gamma: 0.0529 (high sensitivity)
- Turnover: 1,055 (liquid)
- Why it stands out: This call offers aggressive upside potential if POSCO rebounds above $60. A 5% rebound to $58.16 would yield a $3.16 payoff, though its low delta makes it more suitable for a short-term gamma play.

Action Alert: Aggressive bears should prioritize PKX20260220P55 for a short-term bearish trade, while bulls with a high-risk tolerance may test PKX20260220C60 if the stock breaks above $56.32 (intraday high).

Backtest POSCO Stock Performance
The backtest of PKX's performance after a -6% intraday plunge from 2022 to the present reveals a mixed outlook. While the ETF has experienced a maximum return of 1.58% over 30 days, the overall returns have been relatively modest, with a 3-day return of -0.05% and a 10-day return of 0.17%. The win rates also indicate a slight edge, with a 3-day win rate of 47.91%, a 10-day win rate of 45.73%, and a 30-day win rate of 45.13%. However, the maximum return day has been 59 days, which suggests that while there is potential for recovery, it may take some time to achieve.

POSCO’s Selloff: A Tactical Entry Point or a Deeper Downtrend?
POSCO’s 6.17% plunge reflects a mix of sector-wide weakness and regulatory uncertainty, but the stock’s technicals and options activity suggest a potential short-term rebound. Key levels to watch include $53.98 (support) and $56.32 (resistance). The sector leader, Tesla (TSLA), is up 0.36%, offering a contrast to steel’s struggles. Traders should monitor the 52-week low ($39.40) as a critical floor. Act now: Position for a bounce with PKX20260220C60 if $56.32 is cleared, or lock in downside potential with PKX20260220P55 if $53.98 breaks. The next 48 hours will be pivotal.