```
Sign in Subscribe
By Ainvest in options-flow —

ALB: $27.7M Call Spread Defense (Nov 4)

Someone just dumped $20 MILLION worth of calls on Albemarle (ALB) this morning at 10:04:56 AM - TWO trades totaling $27. Smart money flows $27.7M into ALB options. Stock up 9.0% this year. Activity 20x above normal.

⚡ ALB Massive $20M Call Sale - Institutional Profit-Taking Before Earnings! 💰

📅 November 4, 2025 | 🔥 Unusual Activity Detected

🎯 The Quick Take

Someone just dumped $20 MILLION worth of calls on Albemarle (ALB) this morning at 10:04:56 AM - TWO trades totaling $27.7M in premium with 34,000 contracts! This is an 8,420x larger position than average ALB option flow. With earnings dropping tomorrow (November 5th) after market close and lithium markets at critical inflection points, sophisticated money is taking massive profits off the table. Translation: Someone's cashing out BIG before the binary earnings event!

📊 Company Overview

Albemarle Corporation (ALB) is one of the world's largest lithium producers with integrated operations spanning upstream resources, refining plants across multiple countries, and bromine production for flame retardants:
- Market Cap: $11.36 Billion
- Industry: Plastic Materials, Synthetic Resins & Nonvulcan Elastomers
- Current Price: $89.66 (down from recent highs)
- Primary Business: Lithium production for EV batteries, Bromine specialties, Refining catalysts

💰 The Option Flow Breakdown

The Tape (November 4, 2025 @ 10:04:56):

Time Symbol Buy/Sell Call/Put Expiration Strike Volume Premium OI Size Spot Price Option Price
10:04:56 ALB SELL CALL 2026-01-16 $85 17,000 $20,000,000 18,000 17,000 $89.66 $11.93
10:04:56 ALB SELL CALL 2026-01-16 $105 17,000 $7,700,000 20,000 17,000 $89.66 $4.50

🤓 What This Actually Means

This is a massive profit-taking trade on calls expiring January 2026! Here's what went down:

  • 💸 Combined premium collected: $27.7M ($20M + $7.7M)
  • 🎯 Two-legged position: ITM $85 calls ($11.93) + OTM $105 calls ($4.50)
  • ⏰ Time to expiration: 73 days until January 16, 2026
  • 📊 Total size: 34,000 contracts representing 3,400,000 shares worth ~$305M
  • 🏦 Institutional signature: This is NOT retail - this is a major fund unwinding

What's really happening here:
This looks like a covered call unwind or spread exit ahead of tomorrow's earnings. The trader is simultaneously selling $85 ITM calls (getting mostly intrinsic value of $4.66) and $105 OTM calls (collecting remaining time premium). With earnings in 24 hours, they're derisking aggressively rather than gambling on the lithium market narrative.

Unusual Score: 🔥 VOLCANIC (8,420x average size) - This happens maybe once in a lifetime! We're talking about a position comparable to 1% of ALB's entire float being traded in one moment.

📈 Technical Setup / Chart Check-Up

YTD Performance Chart

ALB YTD Performance Chart

Albemarle is down -9.0% YTD with current price at $89.66. The chart shows a volatile year with significant drawdown followed by recovery attempt.

Key observations:
- 📉 Brutal selloff: Stock crashed from ~$120 to $70 lows during lithium price collapse
- 📈 Recent recovery: Bounced 28% from August lows back to $90 area
- 🎢 High volatility: Huge swings reflecting lithium market uncertainty
- 📊 Resistance zone: Currently testing $90 level ahead of earnings
- ⚠️ Downtrend intact: Still below 200-day moving average despite bounce

Gamma-Based Support & Resistance Analysis

ALB Gamma Support/Resistance Levels

Current Price: $88.20 (from gamma data)

The gamma exposure map reveals critical price magnets and walls around current levels:

🔵 Support Levels (Put Gamma Below Price):
- $85 - Strongest support with 4.06B total gamma exposure (3.6% below current)
- $80 - Secondary support at 1.77B gamma (9.3% below)
- $75 - Deep support with 1.27B gamma (15% below)

🟠 Resistance Levels (Call Gamma Above Price):
- $90 - Immediate resistance with 1.95B gamma (2% above current price)
- $95 - Secondary ceiling at 1.49B gamma (7.7% above)
- $100 - Major resistance zone with 2.93B gamma (13.4% above)
- $105 - Extended resistance with 4.01B gamma (19% above) - exactly where one trade sold calls!

What this means for traders:
The gamma data shows ALB is sandwiched between $85 support and $90 resistance - a narrow 5.7% range. The fact that one leg of this massive trade sold calls at $105 (strongest resistance level) suggests the trader expects ALB to stay range-bound or move only modestly higher over the next 73 days. Market makers will defend these levels aggressively.

Net GEX Bias: Bullish (20.67B call gamma vs 11.10B put gamma) - Overall positioning leans bullish, but significant resistance overhead caps upside.

Implied Move Analysis

ALB Implied Move Analysis

Options market pricing for upcoming expirations:

  • 📅 Weekly (Nov 7 - 3 days): ±$6.69 (±7.26%) → Range: $86.96 - $100.16
  • 📅 Monthly OPEX (Nov 21 - 17 days): ±$9.94 (±10.79%) → Range: $83.73 - $105.11
  • 📅 Quarterly Triple Witch (Dec 19 - 45 days): ±$14.32 (±15.54%) → Range: $79.58 - $111.46

Translation for regular folks:
Options traders are pricing in a MASSIVE 7.26% move ($6.69) by Friday - that's huge for a $11B company! This is all about earnings tomorrow. The weekly range ($87-$100) shows the market expects significant volatility. Notice the monthly upper bound of $105.11 - almost exactly where the second leg sold calls at $105 strike. Smart money is betting ALB doesn't break above $105 through November expiration.

The quarterly range topping out at $111.46 suggests even with perfect execution and lithium price recovery, the upside is limited to ~25% over the next 45 days.

🎪 Catalysts

🔥 Immediate Catalysts (Next 7 Days)

Q3 2025 Earnings - November 5, 2025 (TOMORROW!) 📊

Albemarle reports Q3 2025 earnings after market close on Wednesday, November 5, 2025, with conference call Thursday November 6 at 8:00 AM ET. Analyst expectations are cautious but improving:

What to watch: The quarter will reflect ongoing pressure from weak lithium prices (~$10/kg vs $80/kg peak in 2022). However, cost reduction initiatives achieving top end of $300-$400M target should provide margin support. Key focus areas:
- Lithium pricing outlook based on current $9/kg LCE environment
- Progress on $650-700M CapEx reduction from ~$1.8B in 2024
- Free cash flow generation ($538M in H1 2025, up $73M YoY)
- Commentary on 2026 lithium market recovery timing

Lithium Spot Price Action - Recent Stabilization 📈

Battery-grade lithium carbonate trading around $9,836-$10,208 per metric ton as of November 4, 2025. This represents an 80%+ decline from 2022 peaks, BUT:
- Spot prices have risen approximately 10% over the past month as of early November 2025
- Chinese mine closures tightening supply
- Recent incident at Albemarle's Chilean Negra facility reducing supply

🚀 Near-Term Catalysts (Q4 2025 - Q1 2026)

Ketjen and Eurecat Divestiture Closing - H1 2026 💵

On October 27, 2025, Albemarle announced sale of 51% stake in Ketjen business and 50% stake in Eurecat JV for $660M. Expected to close first half of 2026.

Strategic benefits:
- 💰 $660M pre-tax cash proceeds for debt reduction
- 🎯 Sharper portfolio focus on core lithium and bromine
- 💪 Strengthens financial flexibility during lithium downturn
- 🏦 Preserves capital for future growth opportunities

Market reaction: Stock initially dropped 8.3% on announcement as investors interpreted as strategic retrenchment. However, this positions ALB to weather the storm while competitors burn cash.

Lithium Market Recovery - 2026 Inflection Point 📊

Multiple bullish catalysts emerging for lithium demand and pricing:

🔬 Medium-Term Catalysts (2026-2027)

Direct Lithium Extraction (DLE) Technology - 3-5 Years Out 🧪

Albemarle investing $200M in DLE pilot projects in 2025 at Silver Peak Nevada facility, Chile's Salar de Atacama, and Arkansas locations:

Commercial implementation expected 3-5 years away but positions Albemarle as technology leader in sustainable lithium production.

Kings Mountain Mine Reopening - Late 2026 Target ⛏️

Albemarle working to reopen historic Kings Mountain lithium mine in North Carolina with $90M U.S. Department of Defense funding:

This project establishes fully integrated U.S. lithium supply chain from mine to processing - critical for domestic EV battery manufacturing.

🏭 Long-Term Catalysts (2028-2030)

South Carolina Mega-Flex Facility - ON HOLD ⏸️

Albemarle's planned $1.3B lithium hydroxide processing facility in Chester County announced in 2023:

Status: Construction PAUSED due to current weak lithium pricing. Company needs to see market improvements and stronger lithium pricing before proceeding. Construction would take approximately 2.5 years after final investment decision.

Battery Recycling Initiative - 2031+ ♻️

Albemarle developing capabilities to process recycled lithium streams back into battery-grade products:

⚠️ Risk Catalysts (Negative)

Continued Lithium Price Weakness 📉

Despite recent 10% bounce over the past month, lithium prices remain 80%+ below 2022 peaks:
- Chinese producers controlling 60-65% of global lithium refining capacity with lower costs
- Oversupply persists through late 2025
- EV demand slower than expected weighing on lithium consumption
- Any delay in 2026 recovery thesis could extend downturn

Regulatory and Permitting Delays ⚖️

Competition Intensifying 🥊

Dividend Sustainability Question 💵

🎲 Price Targets & Probabilities

Using gamma levels, implied move data, and upcoming catalysts, here are the scenarios:

📈 Bull Case (25% probability)

Target: $105-$115

How we get there:
- 💪 Earnings beat expectations with better-than-feared lithium commentary
- 🚀 Lithium prices continue 10% monthly climb to $12,000+/tonne by year-end
- 📊 JPMorgan's 2026 price forecast of $1,100-$1,200/t gains credibility
- 🔋 ESS demand surprise to upside as battery storage deployments accelerate
- 🇨🇳 Chinese supply cuts deepen (more mine closures, production curtailments)
- 💰 Ketjen deal closes ahead of schedule, debt reduction praised
- 📈 Breakthrough gamma resistance at $90-$95-$100 on sustained buying
- ⛏️ Kings Mountain permit approved faster than expected

Key risks: Even in bull case, hitting $105-$115 requires multiple positive catalysts aligning perfectly. The implied move shows market only expects upper bound of $105 by November expiration and $111 by December. Would need lithium narrative to dramatically shift.

🎯 Base Case (50% probability)

Target: $85-$95 range

Most likely scenario:
- ✅ Earnings meet lowered expectations, guidance cautious but not catastrophic
- 📊 Lithium prices stabilize around $10,000/tonne through Q4 2025
- 🔄 Trading within gamma support ($85) and resistance ($90-$95) bands
- 💰 Cost reduction initiatives continue delivering $300-400M savings
- 💵 Ketjen deal on track for H1 2026 close
- ⏰ Market takes "wait and see" approach for 2026 lithium recovery
- 🏦 Stock consolidates in $85-$95 range through year-end

This is the trade's sweet spot: The massive call seller likely expects exactly this - earnings not moving the needle dramatically, stock staying range-bound below $105 through January expiration. They collect full premium on both legs if ALB stays below $85 (collects intrinsic + time value) and below $105 (collects all time value).

📉 Bear Case (25% probability)

Target: $70-$80

What could go wrong:
- 😰 Earnings miss with worse-than-expected lithium pricing impact
- 📉 Guidance cut for FY2025, 2026 recovery timeline pushed out
- 🇨🇳 Chinese lithium prices resume decline below $9,000/tonne
- 🚗 EV demand concerns resurface (slower adoption, inventory build)
- 💸 Free cash flow deteriorates, dividend sustainability questioned
- 🏭 South Carolina facility delay extended indefinitely
- 🔴 Broader commodity selloff drags lithium sector lower
- 🛡️ Key support: Gamma support at $85 then $80 should limit downside

Important note: Even in bear case, the call seller keeps full premium. Their breakeven on the $85 calls is way down at $85 - $11.93 = $73.07, well below the gamma support levels. Max loss only occurs if ALB crashes below $73, which would require complete lithium market capitulation.

💡 Trading Ideas

🛡️ Conservative: Wait for Post-Earnings Clarity

Play: Stay on sidelines until earnings volatility settles

Why this works:
- ⏰ Earnings tomorrow creates binary event risk - too much uncertainty
- 💸 Implied volatility elevated (7.26% move priced for 3 days!) - options expensive
- 📊 Stock down -9% YTD, lithium narrative still unclear
- 🎯 Better entry likely post-earnings after IV crush reduces premiums
- 📉 Historical pattern: Commodity stocks often gap down on earnings even when "beating"

Action plan:
- 👀 Watch Wednesday after-close earnings for lithium pricing commentary and guidance
- 🎯 Look for pullback to $85 gamma support for stock entry
- ✅ Confirm cost reduction execution and free cash flow generation continuing
- 📊 Monitor lithium spot prices for continued stabilization/recovery
- 💰 Wait for Ketjen deal close and debt reduction before committing capital

Risk level: Minimal (cash position) | Skill level: Beginner-friendly

⚖️ Balanced: Post-Earnings Put Spread

Play: After earnings, buy put spread if stock rallies

Structure: Buy $95 puts, Sell $85 puts (Dec 19 expiration)

Why this works:
- 🎢 IV crush after earnings makes options cheaper - buy after volatility drops
- 📊 Defined risk spread ($10 wide = $1,000 max risk per spread)
- 🎯 Protects against lithium price disappointment or guidance cut
- 💰 Targets gamma support zone at $85-$90 where stock likely finds floor
- ⏰ 45 days to expiration gives time for any post-earnings weakness to play out
- 🔄 Aligns with massive call seller's view that upside is limited

Entry trigger: Only enter if ALB rallies above $95 post-earnings (creating overextension)

Estimated P&L (adjust after seeing post-earnings IV):
- 💰 Pay ~$3-4 debit per spread
- 📈 Max profit: $600-700 if ALB at/below $85 at December expiration
- 📉 Max loss: $300-400 if ALB above $95 (defined and limited)
- 🎯 Breakeven: ~$91-92

Entry timing: Wait 1-2 days post-earnings for IV to fully collapse

Risk level: Moderate (defined risk) | Skill level: Intermediate

🚀 Aggressive: Earnings Straddle Seller (HIGH RISK!)

Play: Sell straddle around current price for earnings

Structure: Sell $90 calls + Sell $90 puts (Nov 7 expiration - Friday)

Why this could work:
- 💸 Collect MASSIVE premium from elevated IV (7.26% move priced = ~$6.70 in premium!)
- 🎯 Betting the actual move is smaller than implied (common for commodity stocks)
- 🔄 Gamma support at $85 and resistance at $95 suggest range-bound action
- ⚡ If ALB stays $85-$95 (base case 50% probability), keep most/all premium
- 📊 Institutional call seller suggests limited upside

Why this could blow up (SERIOUS RISKS):
- 💥 UNLIMITED RISK if big earnings surprise moves stock significantly either direction
- 😱 Lithium narrative could shift dramatically on guidance (up or down 15%+)
- 🚀 Beat + 2026 recovery confirmation could blast through $95 to $105+
- 📉 Miss + guidance cut could crash to $75-$80
- ⚠️ Earnings ESP of -2.16% suggests miss is likely - bearish surprise risk
- 💰 Margin requirements: Broker will require $10,000+ per straddle
- 📊 Assignment risk: Could be forced to buy/sell 100 shares at $90

Estimated P&L:
- 💰 Collect ~$6-8 per straddle ($600-800 credit per position)
- 📈 Max profit: Keep all premium if ALB exactly at $90 Friday
- 📉 Max loss: UNLIMITED - could be $3,000-$5,000+ per straddle on 15% move
- ⚠️ Loss accelerates beyond strikes: Every $1 move past $90 = $100 loss per side

Risk level: EXTREME (unlimited risk both sides) | Skill level: Advanced only

⚠️ WARNING: DO NOT attempt this trade unless you:
- Have experience managing short options through earnings
- Can handle assignment of 100 shares at $90 ($9,000 per side)
- Have sufficient margin (broker may require $15,000+ per straddle)
- Can actively monitor and adjust position immediately after earnings
- Understand this is a bet that market is overpricing earnings volatility
- Accept that one bad earnings call can wipe out months of premium collection

⚠️ Risk Factors

Don't get caught by these potential landmines:

  • ⏰ Earnings binary event in 24 hours: Results Wednesday after close create significant volatility risk. Implied 7.26% move means ALB could gap $6-7 either direction. Lithium guidance commentary will drive reaction more than Q3 results.

  • 💸 Lithium price uncertainty remains high: Despite recent 10% bounce, prices still down 80%+ from peak. Chinese oversupply persists through 2025. Any deterioration back below $9,000/tonne could trigger another leg down in lithium stocks.

  • 📉 Stock down -9% YTD in strong market: ALB underperforming while S&P up +20% YTD shows sector-specific headwinds. Recovery requires lithium cycle turning, not just general market strength.

  • 🏭 Major growth projects on indefinite hold: South Carolina $1.3B facility paused waiting for lithium prices to recover. Kings Mountain mine timeline uncertain pending permits. Growth stalled until market improves.

  • 💰 Dividend sustainability question: Paying $1.62/share annually while losing money. If lithium prices don't recover in 2026, dividend could be cut - major negative catalyst for income investors.

  • 🇨🇳 Chinese competition and geopolitical risk: Chinese producers control 60-65% of global lithium refining capacity with lower costs. ALB's China operations face geopolitical risks. Pricing power limited while Chinese supply dominates.

  • 🔴 Massive call seller creating supply overhang: 34,000 contracts ($27.7M) unwinding suggests sophisticated money thinks upside is limited. When major holders derisk before earnings, it signals caution. Could create technical selling pressure.

  • 📊 2026 recovery thesis still unproven: While JPMorgan forecasts $1,100-$1,200/t prices in 2026 and Arcane predicts supply deficit, these are just forecasts. EV demand growth could disappoint, Chinese supply could remain elevated, or alternative battery chemistries could reduce lithium intensity.

  • ⚖️ Regulatory and permitting delays: Kings Mountain mine still needs state permit approval. Environmental opposition to lithium mining growing. Delays could push domestic supply timeline out years.

  • 💵 Cash burn risk if downturn extends: While generating $538M cash from operations in H1 2025, company still investing heavily. Extended lithium weakness could pressure liquidity despite $660M Ketjen deal proceeds.

🎯 The Bottom Line

Real talk: Someone just dumped $27.7M worth of ALB calls (8,420x average size!) 24 hours before earnings. This isn't bearish on lithium's long-term future - it's just smart risk management. They're taking massive chips off the table before a binary event rather than gambling on volatile earnings and uncertain lithium price recovery timing.

What this trade tells us:
- 🎯 Sophisticated player expects ALB to stay below $105 through January 2026
- 💰 They're satisfied with profits already captured on these positions
- ⚖️ Risk/reward no longer favorable at current levels with earnings uncertainty
- 📊 Similar to selling commodities at decent prices rather than hoping for boom

If you own ALB:
- ✅ Consider trimming 25-50% before earnings (down -9% YTD, facing binary event)
- 📊 Strong gamma support at $85 provides cushion for remaining position
- ⏰ Hold through earnings only if you can stomach 7-10% move either way
- 🎯 If earnings beat with strong 2026 lithium guidance, $105-$115 becomes realistic
- 🛡️ Set mental stop at $80 (major gamma support) to protect capital

If you're watching from sidelines:
- ⏰ Wednesday November 5 after close is moment of truth - mark your calendar
- 🎯 Post-earnings pullback to $85 gamma support would be attractive entry (5% off current)
- 📈 Looking for confirmation that lithium price stabilization continues and 2026 recovery thesis remains on track
- 🚀 Longer-term (12-24 months), lithium market inflection in 2026, Kings Mountain opening, and DLE technology are legitimate catalysts
- ⚠️ Current setup requires lithium cycle to turn - commodity cycle trades are brutal

If you're bearish:
- 🎯 Wait for earnings before initiating positions - don't fight potential short squeeze
- 📊 First support at $85 (gamma wall), major support at $80
- ⚠️ Watch for lithium price breakdown below $9,000 or guidance cut as catalyst
- 📉 Put spreads ($90/$80 or $85/$75) offer defined risk way to play downside
- ⏰ Timing critical: Post-earnings weakness offers best risk/reward for bears

Mark your calendar - Key dates:
- 📅 November 5 (Wednesday) after market close - Q3 2025 earnings (TOMORROW!)
- 📅 November 6 (Thursday) 8:00 AM ET - Earnings conference call
- 📅 November 7 (Friday) - Weekly options expiration, post-earnings price discovery
- 📅 November 21 - Monthly OPEX
- 📅 December 12, 2025 - Ex-dividend date ($0.405/share quarterly)
- 📅 December 19 - Quarterly triple witch expiration
- 📅 January 16, 2026 - Expiration date for this massive $27.7M trade
- 📅 H1 2026 - Ketjen/Eurecat deal closings ($660M proceeds)
- 📅 Late 2026 - Kings Mountain mine potential opening

Final verdict: This is a classic "sell volatility before binary event" signal from institutional money. At current lithium prices with uncertain 2026 recovery timeline, smart money is derisking aggressively. That doesn't mean ALB crashes - it means the risk/reward isn't compelling for aggressive positioning right before earnings. Be patient, wait for earnings clarity, and look for better entry points. The lithium cycle will turn eventually (2026 supply deficit is real), but timing commodity bottoms is notoriously difficult. Let the earnings dust settle first.

The bigger picture: ALB is trading commodity cycle dynamics, not company-specific story. Success depends entirely on lithium price recovery. The JPMorgan $1,100-$1,200/t 2026 forecast and Arcane supply deficit thesis are plausible, but execution risk is high. For patient long-term investors willing to weather volatility, accumulating below $85 with 18-24 month horizon makes sense. For traders, better to wait for clearer lithium price trend.

Disclaimer: Options trading involves substantial risk of loss and is not suitable for all investors. This analysis is for educational purposes only and not financial advice. Past performance doesn't guarantee future results. The 8,420x unusual score reflects this trade's size relative to typical ALB flow - it does not imply the trade will be profitable or that you should follow it. Always do your own research and consider consulting a licensed financial advisor before trading. Earnings create binary event risk with potential for significant gaps either direction. Commodity stocks are particularly volatile and cyclical - only invest capital you can afford to lose.

About Albemarle Corporation: Albemarle is one of the world's largest lithium producers with a $11.36 billion market cap, offering integrated operations spanning upstream resources, refining plants across multiple countries, and bromine production for flame retardants in the Plastic Materials, Synthetic Resins & Nonvulcan Elastomers industry.

Subscribe to AInvest Option Labs

Don’t miss out on the latest issues. Sign up now to get access to the library of members-only issues.
jamie@example.com
Subscribe