Rigetti Computing, Inc. saw a 9.8% rise in its shares, reaching $39.60, during the last trading session with increased trading volume. Over the past four weeks, the company’s stock price has gone up by 14%. This jump follows news that the U.S. government may consider investing in leading quantum firms to enhance national competitiveness. Such investment could lead to new partnerships and better funding for Rigetti, one of the few publicly traded quantum computing companies. The company is expected to report a loss of $0.05 per share for the quarter, an improvement of 37.5% from last year. Anticipated revenues stand at $2.39 million, a slight increase of 0.4% compared to last year. Earnings estimate trends often reflect short-term stock price changes. However, Rigetti’s consensus EPS estimate has remained unchanged over the past 30 days. Keeping an eye on these estimates is essential for predicting future stock performance. In the same sector, Phunware’s shares have risen by 3.8%, even though they have dropped by 7.4% in the last month. Its EPS estimate for the upcoming report has improved by 2.1%, showing a significant change of 44% from the previous year. Phunware has a Zacks Rank of #3 (Hold). With RGTI’s recent 9.8% surge to $39.60, we are seeing heightened implied volatility, making option prices more expensive. This rise is purely driven by speculation about potential U.S. government investment rather than the company’s financial situation. Traders should be ready for sharp price shifts in either direction as developments unfold. For those optimistic about the stock, purchasing call options offers a bet on the rumors of government investment becoming true. A similar situation occurred in early 2024 when government AI initiatives boosted related stocks. The National Quantum Initiative Act has already allocated over $3 billion to the sector since it started. A confirmed equity stake could push the stock much higher, making out-of-the-money calls a high-risk, high-reward option. On the other hand, the steady earnings estimates and a projected revenue growth of only 0.4% strongly suggest a possible pullback. History shows that stocks driven by hype without solid fundamentals often lose their gains once the excitement fades. Buying put options would be a strategy predicting that the weak upcoming earnings report will overshadow recent positive news, bringing the stock price down. Considering the high implied volatility and the uncertain nature of the upcoming news, a long straddle or strangle could be a smart approach. By buying both a call and a put option, traders position themselves for significant price movements regardless of direction. This strategy profits if the stock makes a notable move after the earnings report or an official government announcement, breaking out of its current price range. Timing is crucial; any positions should align with the upcoming earnings release. Looking at options expiring in late November or December 2025 allows enough time for market reactions to both the financial results and any updates on government partnerships. This period captures key potential events for the stock. In contrast, Phunware (PHUN), also in the same industry, shows a different trend, with its earnings estimates revised upward by 2.1% recently. This indicates that while RGTI presents a speculative, news-driven volatility play, other stocks in the sector may have better opportunities based on improving financial perspectives. This comparison highlights the current speculative premium specifically placed on RGTI.

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