Insights 
VT 
IonQ, Inc., a specialist in quantum computing, has experienced a 30% decline in its stock value over the past two weeks. This decrease brought the stock back to its long-term inclining trendline, undoing gains from a breakout during the week of September 15th.
Technical signals had predicted this downturn, with specific chart patterns warning of potential downside pressure. The stock faces a test at the $59.36 trendline, with volatility and rapid movements expected. Traders need to watch for potential breakdowns at this level.
Beneath the $59.36 line, several critical support levels exist, the strongest at $47.33. These technical floors could provoke sharp, short-term rebounds if the stock holds at these points. The stock’s recent drop in such a brief period underscores the high risk until there is a confirmed hold at one of these levels.
We are now looking at a 30% drop in IONQ over the past two weeks, a move that has put the critical $59.36 trendline to the test. This sell-off intensified after last week’s hawkish Fed minutes and a competitor’s breakthrough announcement spooked the growth sector. For perspective, we saw the Nasdaq Composite shed 8% over the same period.
With this sharp move down, we’ve seen IONQ’s 30-day implied volatility surge from around 70% to over 110%, making both puts and calls very expensive. This high premium environment favors strategies that sell volatility, such as credit spreads, if we believe the stock will consolidate around a key level. The risk is that the stock’s notorious volatility continues and blows past our short strikes.
For those betting on a sharp bounce off the $59.36 trendline, buying call options is a direct but costly play due to the inflated volatility. A more prudent approach could be a bull call spread, which would lower the entry cost and benefit from a swift upward move. This strategy positions for the possibility that this technical level will trigger a near-term rebound, as we have seen after similar pullbacks in 2024.
Conversely, a failure to hold $59.36 opens the door to the next major support level at $47.33. Traders anticipating this breakdown could use bear put spreads to target this move while defining their risk in this high-volatility environment. The recent rise in short interest to over 18% of the float suggests we are not alone in preparing for more potential downside.
