Rocket Companies (RKT) Plunges 2.6% Amid Short-Squeeze Fears and AI-Driven Uncertainty

Summary
• Rocket Companies (RKT) trades at $19.535, down 2.6% intraday, with a 52-week range of $10.06–$22.555
• Short interest spikes to 68% of float, signaling potential squeeze dynamics
• Analysts highlight AI-driven mortgage efficiency and energy transition alignment as long-term catalysts

Rocket Companies (RKT) faces a volatile session as short-sellers and rate-cut optimism collide. The stock’s 2.6% decline masks a broader narrative of strategic acquisitions, AI integration, and sector-wide tailwinds. With a 52-week high of $22.555 and a dynamic PE of -303.3, the stock’s technicals and fundamentals present a complex trading landscape.

Short-Squeeze Fears and Earnings Optimism Drive Volatility
Rocket Companies’ intraday decline stems from a confluence of short-covering pressure and earnings-driven optimism. Short interest surged to 68% of the float by July 31, per Finviz, creating a precarious balance between bearish bets and potential squeeze scenarios. Meanwhile, Q2 earnings beat expectations, with revenue rising 148.1% year-over-year to $1.78 billion, and analysts upgraded the stock to 'Buy' amid AI-driven mortgage efficiency. However, the stock’s 2.6% drop reflects profit-taking after a 3.56% rebound on Tuesday, as traders anticipate the Fed’s rate-cut timeline and Mr. Cooper Group (COOP) merger dynamics.

Mortgage Finance Sector Mixed as Rocket Companies Faces Short-Squeeze Dynamics
The Mortgage Finance sector, led by Alliant Energy (LNT) at -0.107% intraday, shows mixed momentum. Rocket Companies’ short-interest spike contrasts with LNT’s stable position, highlighting divergent risk profiles. While RKT’s AI-driven mortgage platform and energy transition alignment position it for long-term growth, its short-term volatility underscores sector-specific challenges. The sector’s 52-week high of $22.555 for RKT and LNT’s -0.107% move reflect broader market uncertainty ahead of the Fed’s rate-cut decision.

Technical Setup and Options Playbook for RKT
• 200-day average: 15.99 (well below current price)
• RSI: 63.48 (neutral, not overbought/sold)
• MACD: 0.355 (bullish divergence)
• Bollinger Bands: Upper at 20.13, Lower at 18.06 (price near lower band)

Rocket Companies is trading near its 200-day average of $15.99, with RSI in neutral territory and MACD signaling bullish momentum. The stock’s 2.6% decline has brought it close to the lower Bollinger Band at $18.06, suggesting potential support. For options, two contracts stand out: RKT20260109P19 (Put) and RKT20260109C19.5 (Call).

RKT20260109P19 (Put):
• Strike: $19, Expiry: 2026-01-09
• IV: 46.57%, Leverage: 54.26%, Delta: -0.343, Theta: -0.017, Gamma: 0.244, Turnover: 1,229
• IV (high volatility), Leverage (high potential return), Delta (moderate bearish exposure), Theta (moderate time decay), Gamma (high sensitivity to price moves), Turnover (reasonable liquidity)
• This put option offers downside protection if RKT breaks below $19, with high gamma amplifying gains in a sharp decline. A 5% downside scenario (to $18.56) would yield a payoff of $0.44 per contract.

RKT20260109C19.5 (Call):
• Strike: $19.5, Expiry: 2026-01-09
• IV: 44.17%, Leverage: 33.11%, Delta: 0.526, Theta: -0.039, Gamma: 0.278, Turnover: 8,705
• IV (moderate volatility), Leverage (moderate return), Delta (moderate bullish exposure), Theta (high time decay), Gamma (high sensitivity), Turnover (strong liquidity)
• This call is ideal for a rebound above $19.5, with high gamma to capitalize on a short-term bounce. A 5% upside (to $20.51) would yield a payoff of $1.01 per contract.

Aggressive bulls may consider RKT20260109C19.5 into a bounce above $19.5, while bears should watch RKT20260109P19 for a breakdown below $19.

Backtest Rocket Companies Stock Performance
The backtest of Rocket Lab USA (RKT) after an intraday plunge of -3% from 2022 to the present shows favorable short-to-medium-term performance. The 3-Day win rate is 48.91%, the 10-Day win rate is 50.89%, and the 30-Day win rate is 57.06%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest was 7.87% over 30 days, suggesting that RKT has the potential for recovery and even gains following significant dips.

Positioning for the AI-Driven Mortgage Inflection Point
Rocket Companies’ 2.6% decline masks a strategic inflection point driven by AI integration, energy transition alignment, and short-squeeze dynamics. While technicals suggest support near $18.06 and resistance at $20.13, the stock’s long-term potential hinges on its AI-driven mortgage efficiency and Mr. Cooper Group merger. Investors should monitor the 200-day average ($15.99) as a critical support level and watch for a short-squeeze catalyst. The sector leader, Alliant Energy (LNT), at -0.107% intraday, underscores the need for sector-specific caution. For now, RKT20260109P19 and RKT20260109C19.5 offer asymmetric risk-reward setups ahead of the Fed’s rate-cut decision and Q4 merger timeline.