Teck Resources Plummets 5% Amid Strategic Investment Drama: What's Brewing in the Copper Sector?

Summary
• Teck Resources (TECK) slumps 4.99% to $42.79, its worst intraday performance since December 2023
• Strategic investment in Metal Energy sparks immediate market skepticism
• Copper sector peers like Freeport-McMoRan (FCX) also retreat, signaling broader industry jitters
• Options volatility surges as traders bet on short-term volatility

Teck Resources is under pressure as a strategic investment in junior miner Metal Energy triggers a sharp selloff. The stock has plunged to $42.79, down from its intraday high of $45.10, amid mixed signals from the copper sector. With Goldman Sachs forecasting a 2026 price correction and U.S. policy uncertainty looming, investors are recalibrating their positions. The move highlights the delicate balance between exploration optimism and macroeconomic headwinds in the critical metals space.

Strategic Investment Sparks Immediate Market Doubt
Teck Resources' 5% intraday drop is directly tied to its strategic investment in Metal Energy Corp., a junior Canadian explorer. While the deal positions Teck as a 9.9% shareholder in Metal Energy's copper-gold-molybdenum projects, the market is reacting with caution. The $0.73/share premium flow-through shares and $0.45/share common shares subscribed by Teck and Centerra Gold suggest aggressive capital allocation, but the lack of immediate production upside and regulatory uncertainties in the Toodoggone District are fueling skepticism. Traders are also wary of the 4-month lockup period for the investment, which limits liquidity and amplifies short-term volatility.

Copper Sector Faces Dual Headwinds: Goldman Sachs vs. Exploration Optimism
The broader copper sector is caught between conflicting narratives. Goldman Sachs Research forecasts a 2026 price decline to $10,710/ton amid a 500,000-ton global surplus, while exploration-driven optimism from projects like Metal Energy's NIV property keeps speculative capital flowing. Freeport-McMoRan (FCX) is down 1.11%, mirroring Teck's decline, as investors weigh near-term supply risks against long-term demand from electrification. The sector's technical indicators remain mixed: RSI at 82.71 suggests overbought conditions, but Bollinger Bands show the stock is trading near the lower band, hinting at potential rebounds.

Options Playbook: Capitalizing on Volatility with Gamma-Driven Contracts
• 200-day average: 38.36 (below current price)
• RSI: 82.71 (overbought)
• MACD: 0.804 (bullish divergence)
• Bollinger Bands: 46.64 (upper), 42.41 (middle), 38.18 (lower)

Key levels to watch include the 200-day support at $38.36 and the 52-week low of $28.32. The RSI overbought reading suggests a near-term pullback, but the long-term bullish Kline pattern and MACD divergence indicate resilience. For leveraged exposure, consider the VanEck Green Metals ETF (GMET) at $35.50 or the First Trust Indxx Critical Metals ETF (FMTL) at $28.38, both of which track copper-related equities.

Top Options Contracts:
• TECK20251219C42
- Type: Call
- Strike: $42.00
- Expiry: 2025-12-19
- IV: 38.64% (moderate)
- Leverage: 30.53%
- Delta: 0.635 (moderate sensitivity)
- Theta: -0.163 (high time decay)
- Gamma: 0.1536 (strong price sensitivity)
- Turnover: $130,509 (liquid)
- Why it stands out: High gamma and moderate delta make this contract ideal for directional bets if Teck breaks above $42.50. A 5% downside scenario (to $40.65) would yield a 10% payoff on the call.

• TECK20251219C44.5
- Type: Call
- Strike: $44.50
- Expiry: 2025-12-19
- IV: 40.56% (moderate)
- Leverage: 106.85%
- Delta: 0.264 (low sensitivity)
- Theta: -0.097 (moderate time decay)
- Gamma: 0.1274 (strong price sensitivity)
- Turnover: $1,000 (liquid)
- Why it stands out: High leverage ratio and gamma make this a speculative play for aggressive bulls. A 5% downside scenario (to $40.65) would result in a 15% payoff on the call.

Actionable Insight: Aggressive bulls may consider TECK20251219C42 into a bounce above $42.50, while cautious traders should monitor the 200-day support at $38.36 for a potential short-term reversal.

Backtest Teck Resources Stock Performance
The backtest of TECK's performance after a -5% intraday plunge from 2022 to now shows favorable results, with the ETF experiencing a maximum return of 15.47% over a 30-day period. The 3-day win rate is 53.70%, the 10-day win rate is 53.70%, and the 30-day win rate is 75.93%, indicating a higher probability of positive returns in the short term following the intraday plunge.

Navigating the Copper Crossroads: Immediate Moves and Sector Watch
Teck Resources' sharp decline underscores the sector's vulnerability to exploration risk and macroeconomic shifts. While the 52-week low of $28.32 remains a distant floor, the 200-day average at $38.36 and the 52-week high of $46.46 frame a critical trading range. Investors should prioritize liquidity and volatility management, given the options market's elevated implied volatility (38.64% for the TECK20251219C42 contract). The sector leader Freeport-McMoRan (FCX) is down 1.11%, signaling broader caution. Watch for a breakout above $42.50 to validate the bullish case or a breakdown below $38.36 to trigger deeper corrections. For now, the VanEck Green Metals ETF (GMET) offers a diversified play on copper's long-term demand story.