Southern Copper Plunges 2.48%—Is the Copper Sector’s Optimism Losing Steam?

Summary
• Southern Copper (SCCO) trades at $97.03, down 2.48% from its $99.50 previous close
• Intraday range spans $96.53–$98.22, reflecting sharp volatility
• Sector news highlights copper’s 0.50% drop to $4.47/lb amid US-China trade uncertainty
Today’s selloff in SCCO defies broader copper market stability, as the stock trades near its 52-week low of $74.11. With technical indicators signaling a short-term bullish trend but long-term range-bound dynamics, traders are left deciphering whether this decline marks a correction or a deeper shift in sentiment.

Profit-Taking Amid Technical Weakness
SCCO’s 2.48% intraday drop stems from a combination of technical exhaustion and sector-wide profit-taking. Despite copper futures stabilizing near $4.47/lb, SCCO’s price action reveals a breakdown below key support levels. The stock’s 30-day moving average (98.35) and 200-day average (96.04) now bracket its current price, indicating a potential consolidation phase. Meanwhile, the MACD (-0.094) and RSI (50.03) suggest neutral momentum, but the Bollinger Bands (91.06–102.23) highlight a widening volatility range, hinting at indecision among traders.

Copper Sector Mixed as Freeport-McMoRan Holds Steady
While SCCO’s decline is pronounced, the broader copper sector remains resilient. Freeport-McMoRan (FCX), the sector’s largest player, fell only 1.53% intraday, suggesting SCCO’s move is more idiosyncratic than sector-driven. Copper futures, which rose 0.50% to $4.47/lb, indicate demand for physical copper remains intact despite US tariff uncertainties. This divergence implies SCCO’s weakness may reflect short-term technical factors rather than a fundamental shift in copper’s structural demand.

Options Playbook: Capitalizing on Volatility and Range-Bound Dynamics
• 30-day MA: 98.35 (above) | 200-day MA: 96.04 (below)
• RSI: 50.03 (neutral) | MACD: -0.094 (bearish divergence)
• Bollinger Bands: 91.06–102.23 (wide range)
• Support/Resistance: 96.45–96.76 (30D) | 96.32–97.11 (200D)

SCCO’s technical profile suggests a short-term bounce from its 96.53 intraday low is possible, but long-term range-bound trading remains likely. Traders should focus on key levels: the 96.53 support and 98.22 resistance. The stock’s 52-week range (74.11–118.64) indicates a potential 24% upside from current levels if the 96.53 support holds.

Top Options Picks:
1. SCCO20250919P95 (Put):
• Strike: $95 | Expiry: 2025-09-19 | IV: 38.49% | Leverage: 26.98% | Delta: -0.396 | Theta: -0.0352 | Gamma: 0.0323 | Turnover: 3910
• IV (Implied Volatility): High volatility expectation | Leverage: Amplifies downside potential | Delta: Moderate sensitivity to price moves | Theta: Significant time decay | Gamma: Strong sensitivity to price acceleration | Turnover: High liquidity
• This put offers asymmetric upside if SCCO breaks below $95, with a 5% downside scenario yielding a $2.03 payoff (max profit: $2.03).

2. SCCO20250919P97.5 (Put):
• Strike: $97.5 | Expiry: 2025-09-19 | IV: 38.79% | Leverage: 20.03% | Delta: -0.479 | Theta: -0.0316 | Gamma: 0.0331 | Turnover: 485
• IV: High volatility expectation | Leverage: Moderate amplification | Delta: Strong sensitivity to price moves | Theta: Moderate time decay | Gamma: Strong sensitivity to price acceleration | Turnover: Sufficient liquidity
• This put benefits from SCCO’s current proximity to the $97.5 strike, with a 5% downside scenario yielding a $0.53 payoff (max profit: $0.53).

Trading Insight: Aggressive bears should consider SCCO20250919P95 into a breakdown below $96.53, while cautious bulls may use SCCO20250919C97.5 (Call) for a bounce above $98.22.

Backtest Southern Copper Stock Performance
The backtest of SCCO's performance after an intraday plunge of -2% shows favorable short-to-medium-term gains. The 3-Day win rate is 55.29%, the 10-Day win rate is 55.13%, and the 30-Day win rate is 55.29%, indicating a higher probability of positive returns in the immediate aftermath of the plunge. The maximum return during the backtest period was 5.71% over 30 days, suggesting that while there may be some volatility, SCCO has the potential for recovery and even gains following significant dips.

Act Now: Watch for Support Breakdown or Sector Rebound
SCCO’s 2.48% drop reflects a technical correction rather than a fundamental shift, but the stock’s proximity to its 52-week low raises caution. Traders should monitor the 96.53 support level and FCX’s -1.53% move as sector barometers. If SCCO breaks below $96.53, the SCCO20250919P95 put offers a high-leverage play on further weakness. Conversely, a rebound above $98.22 could reignite short-term bullish momentum. Investors should also watch for catalysts in the copper sector, such as renewed US-China trade optimism or tariff adjustments, which could drive SCCO’s longer-term trajectory.