Westlake Soars 8.54%—What’s Fueling This Volatile Surge?

Summary
• Westlake (WLK) trades at $82.765, up 8.54% intraday as of 15:14 ET
• Q2 2025 earnings report reveals $142M net loss but $340M EBITDA excluding identified items
• Intraday range spans $80.73 to $84.44, reflecting sharp volatility post-earnings
• Management outlines $200M cost-cutting plan and Pernis facility closure to boost 2026 profitability

Westlake’s stock has surged over 8% in volatile trading following its Q2 earnings report, which highlighted a $142M net loss but improved EBITDA excluding one-time charges. The stock opened near $83, a 9% gain from its previous close of $76.25, and has since traded within a $3.71 range. The move reflects mixed market sentiment toward the company’s cost-reduction efforts and operational challenges in its PEM segment.

Q2 Earnings Report Sparks Mixed Reactions
Westlake’s Q2 earnings report revealed a $142M net loss, driven by $130M in identified items from facility closures and production halts. However, EBITDA excluding these charges rose to $340M, up $52M sequentially, due to stronger performance in the Housing and Infrastructure Products (HIP) segment. The HIP segment’s 16% sequential sales growth offset weaker results in the Performance and Essential Materials (PEM) segment, where global demand and plant outages depressed earnings. Investors are parsing management’s $200M cost-cutting plan and the Pernis facility closure, which CEO Jean-Marc Gilson called a path to 2026 profitability. The stock’s intraday swing from $80.73 to $84.44 underscores uncertainty about the sustainability of these measures.

Chemicals Sector Volatility as DOW Gains 2.06%
Options Playbook: Leverage Gamma and Theta in WLK’s Volatile Move
• 200-day average: $102.85 (well below current price)
• RSI: 41.0 (oversold territory)
• MACD: -0.19 (bearish divergence)
• Bollinger Bands: Price at $82.77, near the middle band ($82.81)
• Support/Resistance: 30D support at $76.04, 200D resistance at $110.32

WLK’s technicals suggest a short-term bounce from oversold RSI levels but a bearish MACD histogram (-1.14) and long-term bearish trend. The stock’s 8.5% intraday gain has pushed it closer to the 200-day average, but the 52W high of $153.34 remains a distant target. For options traders, the key is to balance leverage and liquidity in a volatile environment.

Top Option 1: WLK20250815C85
• Contract Code: WLK20250815C85
• Type: Call
• Strike Price: $85
• Expiration: 2025-08-15
• Implied Volatility: 44.86% (moderate)
• LVR: 53.22% (high leverage)
• Delta: 0.3669 (moderate sensitivity)
• Theta: -0.1452 (strong time decay)
• Gamma: 0.0586 (high sensitivity to price movement)
• Turnover: 310 (reasonable liquidity)
• IV: Indicates market expects moderate volatility
• LVR: High leverage for a 5% upside scenario
• Delta: Suggests moderate directional exposure
• Theta: Strong time decay favors short-term holding
• Gamma: High sensitivity to price swings

This call option stands out for its high leverage ratio (53.22%) and moderate delta (0.3669), making it ideal for a 5% upside scenario. With a 5% move to $86.89, the payoff would be $1.89 per share. The moderate IV and high gamma suggest it could capitalize on WLK’s volatility while avoiding extreme risk.

Top Option 2: WLK20250815C80
• Contract Code: WLK20250815C80
• Type: Call
• Strike Price: $80
• Expiration: 2025-08-15
• Implied Volatility: 71.38% (elevated)
• LVR: 15.28% (moderate leverage)
• Delta: 0.6225 (high sensitivity)
• Theta: -0.2256 (strong time decay)
• Gamma: 0.0371 (moderate sensitivity)
• Turnover: 2060 (high liquidity)
• IV: Suggests elevated volatility expectations
• LVR: Moderate leverage for a 5% upside scenario
• Delta: High sensitivity to price movement
• Theta: Strong time decay favors short-term holding
• Gamma: Moderate sensitivity to price swings

This call option offers high liquidity (2060 turnover) and a delta of 0.6225, making it a safer bet for a 5% upside. With a projected payoff of $6.89 per share at $86.89, it balances directional exposure with time decay. The elevated IV (71.38%) reflects market uncertainty, which could work in favor of a bullish trade.

Hook: Aggressive bulls may consider WLK20250815C85 into a bounce above $85, while WLK20250815C80 offers a safer, high-liquidity play on WLK’s near-term volatility.

Backtest Westlake Stock Performance
The performance of Westlake Chemical (WLK) after a 9% intraday surge can be analyzed as follows:1. Post-Surge Performance: Following the 9% intraday surge, WLK's stock price likely experienced a significant upward movement. However, the broader market's reaction and the stock's performance over the following days and weeks would be crucial in determining the sustainability of the gains.2. Market Reaction and Subsequent Performance: It would be important to assess how the market responded to this surge. Was it a reaction to a specific announcement, a sector-wide development, or a correction of previous oversold conditions? Subsequent trading sessions would reveal whether the price increase was due to strong fundamentals or speculative activity.3. Technical Analysis: A 9% surge can often lead to a consolidation phase, where the stock price stabilizes or corrects slightly. Technical indicators, such as the Relative Strength Index (RSI), would be useful in determining if the stock was overbought or if the momentum could continue.4. Fundamental Analysis: The company's recent earnings report and market expectations should be considered. A positive earnings surprise or an improvement in the company's fundamentals could support the stock's price increase. Conversely, if the surge was not supported by earnings growth or was driven by speculative factors, a pullback might be expected.5. Volatility and Risk: The volatility following a significant surge can be high. Investors would need to assess the risk associated with holding the stock, considering both the potential for further gains and the likelihood of a correction.In conclusion, while a 9% intraday surge is a significant event, it is important to analyze the underlying reasons and the stock's subsequent performance to make informed decisions about WLK's future prospects.

WLK’s Volatility: A High-Risk, High-Reward Play
Westlake’s 8.5% intraday surge reflects a mix of optimism over cost-cutting measures and skepticism about its PEM segment’s recovery. While the stock’s technicals suggest a short-term bounce from oversold RSI levels, the bearish MACD and long-term bearish trend indicate caution. Investors should watch for a break above the 52W high of $153.34 or a breakdown below the 30D support at $76.04. Meanwhile, the chemicals sector leader DOW is up 2.06%, offering a broader context for WLK’s move. For now, WLK20250815C85 and WLK20250815C80 present high-leverage options to capitalize on WLK’s volatility, but traders must balance risk with the company’s operational challenges.