MP Materials Plummets 9.33% Amid Sector Volatility and Strategic Uncertainty

Summary
• MP Materials (MP) trades at $69.93, down 9.33% from its previous close of $77.13
• Intraday range spans $69.59 to $77.47, with 15.3M shares traded
• Recent news hints at potential U.S. government equity stakes and a $500M Apple partnership
• Sector leader Rio Tinto (RIO) declines 1.17%, signaling mixed industrial metals sentiment

MP Materials, a rare earths leader, faces a sharp intraday selloff amid swirling speculation about federal ownership stakes and execution risks in its expansion plans. The stock’s 9.33% drop reflects investor anxiety over operational delays and geopolitical uncertainties, despite recent partnerships with the Department of Defense and Apple. With the 52-week range at $15.56–$82.50, the stock’s volatility underscores the sector’s sensitivity to policy shifts and supply chain dynamics.

Federal Ownership Speculation and Execution Risks Trigger Sell-Off
The sharp decline in MP Materials’ stock price stems from renewed speculation about potential U.S. government equity stakes in the company, as reported by Simply Wall St. While the Trump administration’s interest in securing rare earth supply chains aligns with MP’s strategic goals, the prospect of federal ownership introduces operational risks, including regulatory oversight and decision-making constraints. Additionally, recent news highlights execution risks around the company’s downstream magnet expansion, with delays or overruns threatening its $1.0B revenue forecast by 2028. The stock’s intraday low of $69.59 suggests traders are pricing in these uncertainties, despite the company’s $500M partnership with Apple and a $1B DoD-backed magnet production facility.

Industrial Metals Sector Mixed as MP Materials Underperforms
The industrial metals sector remains fragmented, with MP Materials underperforming its peers. Rio Tinto (RIO), the sector leader, declined 1.17% as global demand for commodities faces headwinds from slowing Chinese growth and geopolitical tensions. While MP’s rare earths focus positions it differently from broader industrial metals, the sector’s overall risk-off sentiment has amplified its volatility. The recent $500M Apple partnership and DoD collaboration highlight MP’s strategic importance, but execution risks and federal ownership speculation have overshadowed these positives, creating a divergence from the sector’s mixed performance.

Options and Technicals: Navigating Volatility in a High-Beta Play
• MACD: 2.24 (bullish), Signal Line: 1.35, Histogram: 0.89 (positive divergence)
• RSI: 80.48 (overbought), Bollinger Bands: $58.49–$77.54 (price near upper band)
• 200D MA: $35.51 (far below current price), 30D MA: $69.05 (support/resistance near $63.03)

MP Materials’ technicals suggest a short-term overbought condition, with RSI at 80.48 and price near the upper Bollinger Band. The bullish MACD divergence hints at potential for a rebound, but the 200D MA remains a distant support. Traders should monitor the $63.03 support level (30D range) and the $77.54 upper band as key inflection points. The stock’s high beta and recent volatility make it a candidate for short-term options strategies.

Top Options Picks:
• MP20251003P69 (Put):
- Strike: $69, Expiry: 2025-10-03
- IV: 68.83% (moderate), Leverage: 29.90% (high), Delta: -0.422 (moderate), Theta: -0.0077 (low decay), Gamma: 0.0549 (high sensitivity)
- Turnover: $354,850 (high liquidity)
- Why: This put option offers high leverage and gamma, ideal for capitalizing on a 5% downside move (projected price: $66.43). Payoff: max(0, $66.43 - $69) = $0 (breakeven at $69).
• MP20251003P68 (Put):
- Strike: $68, Expiry: 2025-10-03
- IV: 69.45% (moderate), Leverage: 36.25% (high), Delta: -0.368 (moderate), Theta: -0.0248 (moderate decay), Gamma: 0.0524 (high sensitivity)
- Turnover: $237,841 (high liquidity)
- Why: This put benefits from high IV and leverage, with a projected payoff of $1.43 per share if price drops to $66.43. Payoff: max(0, $66.43 - $68) = $1.43.

Action Insight: Aggressive bears may consider MP20251003P69 for a 5% downside scenario, while MP20251003P68 offers a balanced risk-reward profile. Both options are well-positioned for liquidity and sensitivity to price swings.

Backtest MP Materials Stock Performance
The backtest has been completed. Please review the interactive results panel on the right for full performance details and underlying assumptions. Key observations and next-step suggestions are summarized below the panel.Insights & suggestions (not duplicated from the panel):1. Risk–return profile • Strong raw return but extremely high drawdown—strategy is volatile and capital-intensive. • Sharpe ratio below 0.5 indicates marginal risk-adjusted attractiveness.2. Practical considerations • Slippage on large plunges could reduce actual returns; consider incorporating realistic execution costs. • Adding a stop-loss (e.g., 5 %) or capping position size may reduce downside volatility.3. Possible refinements • Test alternative holding horizons (e.g., 2–5 days) to capture delayed rebounds. • Layer macro filters (e.g., only trade when the stock is above its 200-day MA) to avoid bear-market traps.Let me know if you’d like further iterations—such as adding risk controls, extending the test to peers, or optimizing the holding period.

MP Materials at Crossroads: Watch for $63.03 Support and DoD Partnership Clarity
MP Materials’ 9.33% intraday drop reflects investor jitters over federal ownership speculation and execution risks, despite its strategic partnerships with Apple and the DoD. The stock’s technicals suggest a potential rebound from the $63.03 support level, but a breakdown below this could signal deeper selling. With the sector leader Rio Tinto (RIO) down 1.17%, broader industrial metals sentiment remains cautious. Investors should monitor the DoD’s equity stake developments and production timelines for the 10X Facility. Act Now: Position short-term puts like MP20251003P69 if $63.03 breaks, or hold for a rebound above $77.54 to re-enter long positions.