Rocket Lab Plunges 7.17% Amid Volatile Intraday Action – What’s Behind the Selloff?

Summary
• Rocket Lab (RKLB) trades at $57.08, down 7.18% from its $63.05 open
• Intraday range spans $56.17 to $64.56, signaling sharp volatility
• Turnover surges to 19.8 million shares, 4.1% of float
• Sector leader Lockheed Martin (LMT) defies trend with 0.45% gain
• Rocket Lab’s 52-week high of $73.97 now feels distant as the stock tests critical support levels. The selloff has triggered a spike in options activity, with put options dominating the December 19 expiration cycle. Traders are scrambling to decipher whether this is a short-term correction or a deeper reevaluation of the company’s fundamentals.

Options Volatility and Technical Divergence Fuel Sharp Decline
Rocket Lab’s intraday collapse stems from a combination of technical exhaustion and speculative pressure. The stock’s RSI of 84.42 indicates overbought conditions, while the MACD histogram of 2.71 suggests a fading bullish momentum. With the price now below its 30-day moving average of $49.13, short-term traders are rotating to safer assets. The options chain reveals a surge in put volume at the $57 strike, with implied volatility ratios above 100%, signaling heightened bearish expectations. This divergence between technical indicators and the stock’s recent bullish trend has triggered algorithmic selling, amplifying the downward spiral.

Options Playbook: Capitalizing on Volatility with RKLB20251219P57 and RKLB20251219C57
• Technical Indicators:
- 200-day average: $38.47 (well below current price)
- RSI: 84.42 (overbought)
- MACD: 1.71 (bullish), Signal Line: -1.00 (bearish)
- Bollinger Bands: Price at $57.08 vs. upper band $61.19
• Key Levels: Immediate support at $56.17 (intraday low), resistance at $64.56 (intraday high). A break below $56.17 could trigger a test of the 200-day MA at $38.47.
• Options Analysis:
- RKLB20251219P57 (Put):
• Strike: $57, Expiry: 12/19, IV: 101.12%, Leverage: 20.67%, Delta: -0.484, Theta: -0.0145, Gamma: 0.059261, Turnover: 339,997
• IV (Implied Volatility): High volatility suggests strong bearish sentiment
• Delta (-0.484): Moderate sensitivity to price drops
• Gamma (0.059): High sensitivity to price movement
• Turnover (339,997): High liquidity ensures easy entry/exit
• Why it stands out: This put option offers a 104.58% price change potential if the stock continues its decline. A 5% downside to $54.22 would yield a payoff of $2.78 per contract.
- RKLB20251219C57 (Call):
• Strike: $57, Expiry: 12/19, IV: 96.18%, Leverage: 22.83%, Delta: 0.514, Theta: -0.479, Gamma: 0.062, Turnover: 181,996
• IV (96.18%): Elevated volatility supports both bullish and bearish scenarios
• Delta (0.514): Balanced sensitivity to price swings
• Theta (-0.479): High time decay favors short-term traders
• Why it stands out: This call option balances risk and reward, ideal for a rebound above $57. A 5% upside to $59.93 would yield a $2.93 payoff, though the current overbought RSI suggests caution.
• Trading Setup: Aggressive bears should prioritize RKLB20251219P57 for a short-term bearish play, while cautious bulls may use RKLB20251219C57 as a hedge if the stock rebounds above $57. The high gamma and turnover in both contracts make them ideal for volatile environments.

Backtest Rocket Lab Stock Performance
The backtest of Rockwell Automation (RKLB) after an intraday plunge of -7% from 2022 to the present shows favorable performance metrics. The 3-Day win rate is 56.34%, the 10-Day win rate is 52.81%, and the 30-Day win rate is 58.00%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 16.78%, which occurred on day 59, suggesting that RKLB has the potential for significant gains following a substantial pullback.

Act Now: Rocket Lab’s Volatility Presents High-Risk, High-Reward Opportunities
Rocket Lab’s 7.17% intraday drop has created a volatile but potentially lucrative trading environment. The stock’s technical divergence—bullish MACD vs. bearish RSI—suggests a critical juncture. Traders should monitor the $56.17 support level and the $64.56 resistance. Sector leader Lockheed Martin (LMT) remains resilient with a 0.45% gain, indicating aerospace fundamentals are intact. For those willing to take calculated risks, the RKLB20251219P57 put offers a high-leverage bearish play, while the C57 call provides a balanced hedge. Watch for a breakdown below $56.17 or a rebound above $64.56 to confirm the next directional move.