Due to China’s artificial intelligence model called DeepSeek, nearly $1 trillion of equity value was erased from the technology sector at the start of the week. To be fair, not all enterprises were directly affected. However, the perception shift — particularly that U.S. firms no longer enjoy a hegemonic stranglehold on pivotal innovations — was enough to derail several tech players.
One enterprise that hardly skipped a beat, though, was Rigetti Computing (NASDAQ:RGTI). A leading quantum computing specialist, Rigetti focuses on developing superconducting quantum processors and integrating them into quantum computing systems. It operates in both the hardware and software spheres, aiming to advance the overall commercial viability of the field.
To be sure, quantum computing is a young market and therefore relatively small. According to Grand View Research, the global quantum arena carried a valuation of $1.21 billion in 2023. However, analysts there estimate that the industry could expand at a compound annual growth rate (CAGR) of 20.1% from 2024 to 2030. At the culmination of the forecasted period, the sector could be worth $4.24 billion.
Even so, the raw projections don’t mean much, with some of the world’s biggest tech firms carrying market capitalizations in the trillions. However, the investment thesis surrounding RGTI stock and its ilk centers on the potential blue-sky valuation.
Since quantum computers represent an entirely new paradigm — solving problems by several orders of magnitude faster than even advanced supercomputers — Rigetti could be in the driver’s seat regarding the next great innovation.
So, should investors bet on RGTI stock? It’s a complicated narrative.
When RGTI stock is viewed stochastically — that is, devoid of any other context aside from the temporal — the equity carries a negative bias. For instance, a position entered at the beginning of the week only has a 45.74% chance of being profitable by the end of it. Over a four-week basis, this trend eventually diminishes down to only a 43.46% chance. That’s not great.
However, when RGTI stock is viewed dynamically — observing pricing behaviors following an extreme event — the character of the equity changes. In the business week ending Jan. 24, RGTI gained over 27% of market value. During times when the security gains 10% to 30% in a one-week period, the end of the fourth subsequent week sees a positive return 52.63% of the time.
I still wouldn’t say those are great odds. However, there is a noticeable shift in behavior. Arguably, RGTI stock benefits from FOMO or the fear of missing out. It just becomes a question of how long this sentiment can last until it doesn’t.
Keep in mind that from around the middle of November last year to the end of December, RGTI stock skyrocketed. Unfortunately, as the calendar turned a page, Rigetti crumbled. A similar scenario materializing again wouldn’t be out of the question, especially with the company’s sky-high sales multiple of nearly 171X.
Given the volatility risks, a capped-risk, capped-reward approach — such as a bull call spread options strategy — may be intriguing, but only for the most battle-hardened speculator. One idea that stands out is the 12/14 bull call spread for the options chain expiring Feb. 7. This trade involves buying the $12 call and simultaneously selling the $14 call.
Why this options chain over the others? In the second subsequent week following an extreme-greed event, RGTI stock tends to rise 66.67% of the time. With this intelligence, traders can choose to be strategically speculative rather than just wildly swing the bat.