I’ll be revisiting this analysis daily to track how the lithium rally unfolds and to anticipate where the next major moves may come. The goal is to cut through the day-to-day noise and keep focus on the bigger picture into Christmas.
The Big PictureThe lithium rally out of China kicked into gear when CATL’s Jianxiawo/Yichun mine shut down on a lapsed license, sending futures in Guangzhou limit-up (~+8%) in a single day. Spot lithium carbonate had already been climbing through August (~¥71–72k/t), and this supply shock lit a fire under the market.
Lithium equities responded but you’ll notice ALB, the sector benchmark, has been stuck in a tight range around USD $80. That’s not because the fundamentals are weak. It’s because ALB is mechanically pinned by massive positive gamma into the Sep 19 quarterly options expiry.
The $80 Gamma Wall
ALB’s biggest options positioning sits at $80 — +7.9M GEX (55% of total) at that strike.
This “positive gamma regime” means market makers hedge in a way that absorbs volatility, buying dips and selling rips, pulling price back toward $80.
It’s not a forecast that lithium will stall — it’s risk management mechanics.
In 2022, ALB’s gamma profile was very different, and the stock tracked lithium spot much more freely.
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How This Impacts LTR
LTR trades on the ASX, but it moves in strong correlation with ALB because they share the same lithium fundamentals and global investor flows.
When ALB is pinned, LTR often experiences suppressed volatility too, especially via ETF/index flows and sentiment bleed-over.
The “invisible leash” on ALB right now is indirectly influencing LTR.
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What Happens After Sep 19
Aug 15: First gamma drop (-4.2M), volatility potential +47% vs today, but pinning still moderate.
Sep 19: Gamma collapses from ~13M to ~0.7M in our model — the $80 wall is gone.
Post–Sep 19, ALB and LTR will trade much more directly on lithium price fundamentals.
If China spot keeps rising, we could see a sharp breakout as both names “catch up” to the commodity.
If China spot fades before then, the release could mean sharper downside.
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Outlook to Christmas
Base Case: China spot holds gains and grinds higher on tight supply; ALB breaks $80–$82 post–Sep 19 and runs toward mid-80s, LTR follows proportionally into the $1.15–$1.20 zone.
Bull Case: Continued supply tightness + positive demand data; ALB in the 90s by early December, LTR $1.30+.
Bear Case: China rally fizzles; ALB back to low 70s, LTR sub-$0.90 by late October.
Key dates:
Aug 15 — first gamma roll-off, watch for small range expansion.
Sep 19 — major gamma expiry, potential breakout/down catalyst.
Late Oct–Nov — seasonal window where sector flows often pick up before year-end positioning.
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Bottom Line
The lithium rally is real, the reason you’re not seeing fireworks in ALB (and by extension LTR) is a mechanical options pin, not a lack of momentum. When that pin lifts after Sep 19, the sector’s moves will be much more “honest” and directly tied to China spot prices.
If you’re bullish lithium into Christmas, the current calm may be the last chance to position before a possible surge. If you’re cautious, the same date is your window to reassess because once the leash comes off, the swings get bigger in both directions.
I will update daily when I can.
(20min delay)