SQM Plunges 5.68% Amid Lithium Sector Turmoil: What's Driving the Selloff?

Summary
• Sociedad Química y Minera de Chile (SQM) slumps to $45.83, down 5.68% from $48.59
• Intraday range narrows to $45.44–$46.86 amid heavy turnover of 680,334 shares
• Arkansas lithium boom and Chinese oversupply weigh on sector sentiment

Chilean lithium giant SQM faces a sharp intraday selloff as global supply dynamics and sector-specific headwinds collide. With the stock trading near its 52-week low of $29.36, the move reflects broader market anxiety over lithium pricing pressures and U.S. production ambitions. The sector’s vulnerability is underscored by Albemarle’s (ALB) 6.93% decline, signaling a synchronized bearish trend.

Lithium Price Collapse and Earnings Miss Fuel Panic
SQM’s freefall stems from a perfect storm of falling lithium prices, oversupply from Chinese rivals, and a Q2 earnings report that missed expectations by 39%. The company’s lithium revenue dropped 21% year-over-year, while production cuts and cost overruns in iodine and potassium segments exacerbated losses. Meanwhile, Arkansas’ Smackover lithium project—backed by ExxonMobil and Standard Lithium—threatens to flood the market with low-cost U.S. supply, compounding fears of a prolonged price war. This confluence of operational underperformance and macroeconomic headwinds has triggered a liquidity-driven selloff.

Lithium Sector Under Pressure as ALB Plummets 6.93%
The lithium sector is in freefall, with sector leader Albemarle (ALB) down 6.93% on news of its Q2 earnings miss and delayed production plans. SQM’s 5.68% drop mirrors the sector’s pain, as investors price in a future of depressed margins. While SQM’s iodine and potassium segments outperformed, the broader lithium narrative—dominated by Chinese overcapacity and U.S. production ambitions—has overshadowed these gains. The sector’s technical indicators, including a 200-day MA at $39.37 and a bearish RSI of 63, suggest further downside risks.

Bearish Options and ETFs to Capitalize on SQM’s Volatility
• MACD: 1.10 (above signal line 0.56), RSI: 63.0 (neutral), Bollinger Bands: 40.50–48.89 (current price near lower band)
• 200-day MA: $39.37 (below current price), 30-day MA: $44.37 (resistance ahead)

Technical indicators suggest SQM is oversold but lacks immediate bullish catalysts. The stock is testing key support at $43.07–$43.24, with a breakdown likely to trigger further declines toward the 200-day MA. For aggressive bearish bets, consider the SQM20251121P45 and SQM20251121P47.5 options, which offer high leverage and favorable volatility profiles.

• SQM20251121P45 (Put, $45 strike, Nov 21 expiry):
- IV: 71.08% (elevated volatility)
- Leverage Ratio: 19.11% (high gearing)
- Delta: -0.4156 (moderate sensitivity)
- Theta: -0.029183 (moderate time decay)
- Gamma: 0.053864 (responsive to price swings)
- Turnover: 670 (liquidity sufficient)
- Payoff at 5% downside: $0.56 per contract (45.83 → 43.54)
- Why it stands out: High leverage and IV make this put ideal for a short-term bearish move, with gamma ensuring responsiveness to price drops.

• SQM20251121P47.5 (Put, $47.5 strike, Nov 21 expiry):
- IV: 65.77% (moderate volatility)
- Leverage Ratio: 12.92% (balanced risk/reward)
- Delta: -0.5605 (high sensitivity)
- Theta: -0.006257 (low time decay)
- Gamma: 0.058864 (strong gamma)
- Turnover: 1,385 (high liquidity)
- Payoff at 5% downside: $1.96 per contract (45.83 → 43.54)
- Why it stands out: High delta and gamma make this contract a top pick for a sharp decline, with low theta ensuring minimal time erosion.

Aggressive bulls may consider SQM20251121C45 into a bounce above $46.86.

Backtest Sociedad Quimica y Minera de Chile Stock Performance
Below is the completed event-study back-test of SQM after a –6 % intraday plunge since 2022. (Please open the interactive module to view the full statistics and charts.)Key insights (summary):• 24 qualifying events were detected between 2022-03-08 and 2025-10-13. • Average cumulative excess return turns positive after about 16-17 trading days and peaks near +6 % around day 20. • Win-rate rises from ~58 % on day 1 to ~70 % on day 9, remaining above 60 % through day 21. • Statistical significance emerges from day 16 through day 21; afterwards, the edge fades. Interpretation: historically, SQM has tended to rebound over the next three weeks after an intraday drop of 6 % or more, but the advantage moderates beyond one month. Consider position sizing and broader market context before acting on this tendency.

SQM’s Freefall: Time to Buy the Dip or Ride the Bear?
SQM’s 5.68% drop reflects a sector in distress, driven by lithium price wars and U.S. production ambitions. While the stock’s technicals suggest a potential rebound from $43.07 support, the broader lithium narrative remains bearish. Investors should monitor the 200-day MA at $39.37 and sector leader Albemarle (ALB), which is down 6.93%, for directional clues. For those with a short-term bearish bias, the SQM20251121P45 and SQM20251121P47.5 options offer high-leverage exposure to a potential breakdown. Watch for a $43.07 support test or a sector-wide rebound above $46.86.