SQM Surges 5.59% on Lithium Partnership Hype: Is This the Start of a Bull Run?

Summary
• SQM’s stock rockets 5.59% to $62.72, hitting its 52-week high of $64.6
• Analysts highlight Codelco joint venture’s 300,000-tonne lithium output boost
• RSI near overbought territory at 79.96 signals aggressive short-term buying

Chilean lithium giant Sociedad Química y Minera de Chile (SQM) is surging on renewed investor optimism tied to its Codelco joint venture. With lithium prices and demand surging, the stock’s intraday high aligns with its 52-week peak, while technical indicators suggest a potential continuation of the rally. The move reflects broader sector momentum as global supply tightness and regulatory shifts reshape the critical minerals landscape.

Lithium Partnership Ignites Investor Optimism
SQM’s sharp intraday rally is directly tied to its newly announced joint venture with Codelco, which is projected to increase refined lithium output by 300,000 tonnes annually. This partnership, highlighted by Itau BBA in a recent coverage resumption, addresses SQM’s near-term growth catalysts amid global EV battery demand. Analysts note that the venture enhances production efficiency and capital allocation, aligning with management’s 2025 sales guidance. While regulatory and geopolitical risks persist, the immediate optimism stems from the perceived execution certainty of this strategic collaboration, which directly ties to SQM’s lithium-centric growth narrative.

Metals and Mining Sector Rally as Lithium Demand Soars
The Metals and Mining sector is broadly buoyed by SQM’s surge, with lithium-focused peers like Albemarle (ALB) rising 3.31%. The sector’s momentum is driven by regulatory tailwinds and supply constraints, particularly in South America. SQM’s joint venture with Codelco positions it as a key beneficiary of the lithium boom, contrasting with peers facing production delays or regulatory hurdles. The sector’s 1.24% turnover rate for SQM underscores strong institutional participation, reflecting broader confidence in critical minerals as a long-term investment theme.

Options Playbook: Capitalizing on SQM’s Bullish Momentum
• MACD: 3.32 (above signal line 2.17), Histogram: 1.15 (bullish divergence)
• RSI: 79.96 (overbought, but supported by strong volume)
• Bollinger Bands: Price at upper band ($64.6), suggesting potential continuation
• 200-day MA: $40.06 (far below current price, indicating long-term strength)

Top Options Picks:
1. SQM20251219C60 (Call, $60 strike, 12/19 expiry):
- IV: 65.05% (high volatility)
- Delta: 0.626 (moderate sensitivity to price moves)
- Theta: -0.116 (rapid time decay)
- Gamma: 0.032 (responsive to price acceleration)
- Turnover: $2,575 (liquid)
- Leverage: 10.32% (amplifies gains)
- Payoff at 5% upside ($65.86): $5.86 per contract. This call offers a high-leverage entry for a continuation of the rally, with IV and gamma favoring aggressive price moves.

2. SQM20251219C62.5 (Call, $62.5 strike, 12/19 expiry):
- IV: 61.45% (moderate volatility)
- Delta: 0.541 (balanced sensitivity)
- Theta: -0.110 (aggressive time decay)
- Gamma: 0.035 (high responsiveness)
- Turnover: $3,974 (liquid)
- Leverage: 13.81% (strong amplification)
- Payoff at 5% upside ($65.86): $3.36 per contract. This contract balances IV and leverage, ideal for a mid-term hold as SQM tests key resistance levels.

Action Insight: Aggressive bulls should target SQM20251219C60 into a break above $64.6, while conservative traders may scale into SQM20251219C62.5 as a hedge against volatility. Monitor the 200-day MA ($40.06) as a critical support level.

Backtest Sociedad Quimica y Minera de Chile Stock Performance
The backtest is complete. I have prepared an interactive module so you can review the full statistics, parameter settings and equity-curve visualization directly.Key takeaways (outside the module):• The strategy underperformed, showing difficulty turning large one-day spikes into sustainable gains. • Average winner (+7.2 %) barely offsets average loser (–8.4 %), and hit-ratio is insufficient. • Consider tightening the entry filter (e.g., add volume confirmation) or widening exits.Feel free to explore the interactive panel above for full details.

SQM’s Lithium Bet: Time to Ride the Wave or Wait for Confirmation?
SQM’s 5.59% intraday surge is a clear signal of investor confidence in its lithium-centric growth narrative, driven by the Codelco joint venture and regulatory tailwinds. While the RSI near overbought levels and Bollinger Band saturation suggest caution, the 200-day MA and MACD divergence indicate a potential continuation of the rally. Sector leader Albemarle (ALB) rising 3.31% reinforces the theme of critical minerals outperforming. Act now: Buy SQM20251219C60 if $64.6 holds; exit if the 200-day MA ($40.06) is breached. The next 72 hours will test whether this is a breakout or a flash rally.