IonQ, Inc., a company focused on quantum computing, has seen its stock value drop by 30% in the last two weeks. This decline has brought the stock back to its long-term upward trendline, reversing the gains made after a breakout around September 15th. Technical indicators had warned of this drop, highlighting patterns that suggested a downturn. The stock is now testing the $59.36 trendline, with high volatility and quick price changes expected. Traders should be vigilant for possible breakdowns at this level. Below the $59.36 line, there are key support levels, with the strongest at $47.33. These levels could trigger quick rebounds if the stock stays above them. The stock’s rapid decline highlights significant risk until it confirms a hold at one of these support levels. The current 30% drop in IONQ has put the critical $59.36 trendline under pressure. This sell-off intensified after last week’s hawkish Fed minutes and a competitor’s announcement that unsettled the growth sector. For context, the Nasdaq Composite also fell by 8% during this time. With this sharp decline, IONQ’s 30-day implied volatility has jumped from around 70% to over 110%, making options like puts and calls expensive. In this high-premium environment, strategies that sell volatility, such as credit spreads, may be more favorable if the stock stabilizes around a key level. However, there’s a risk that the stock’s unpredictable volatility could exceed our short strikes. For those expecting a bounce from the $59.36 trendline, buying call options could be an option, though it’s costly due to high volatility. A smarter choice may be a bull call spread, which reduces entry costs and benefits from a quick upward movement. This strategy anticipates a near-term rebound at this critical level, similar to previous recoveries in 2024. On the flip side, if the stock fails to hold at $59.36, it could move down to the next major support level at $47.33. Traders predicting this drop might consider bear put spreads to target this decline while managing their risk in a volatile market. Additionally, the recent increase in short interest to over 18% of the float indicates that others are also preparing for potential further declines.

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