Newsmax Surges 13.4% on Settlement News: A Legal Storm Clears or a New Battle Begins?

Summary
• Newsmax (NMAX) surges 13.38% intraday to $13.73, breaking above $13.77
• $67M Dominion settlement paid in 3 installments, with $27M due Friday
• RSI at 24.02 and Bollinger Bands signal short-term bullish momentum
• Options frenzy: 2025-08-22 $13 call options trade 591.67% higher

Newsmax’s stock erupted on Monday as the $67 million Dominion Voting Systems settlement crystallized, sending shares 13.4% higher. The move defied the stock’s 52-week low of $11.40 and a -25.67 P/E ratio, fueled by a mix of legal resolution optimism and lingering skepticism over Delaware’s judicial process. With the stock trading near its intraday high of $13.77, traders are parsing whether this is a short-covering rebound or a catalyst for sustained momentum.

Legal Settlement Sparks Volatility Amid Judicial Backlash
Newsmax’s 13.4% surge stems from its $67 million settlement with Dominion Voting Systems, a resolution of a $1.6 billion defamation lawsuit. The company attributes the move to Delaware’s perceived judicial bias, citing rulings that precluded a jury trial on defamation claims and suppressed context about Fox’s prior $787 million settlement. While the settlement allows Newsmax to avoid prolonged litigation, the stock’s sharp rise reflects investor relief over a capped liability and optimism about operational clarity. However, the settlement’s three-year payment structure and Newsmax’s reincorporation to Florida underscore ongoing risks tied to its legal environment.

Options Playbook: Capitalizing on NMAX’s Volatility with Gamma-Driven Calls
• MACD: -0.807 (Signal: -0.833, Histogram: 0.026) signals short-term bullish divergence
• RSI: 24.02 (oversold) suggests potential rebound
• Bollinger Bands: Price at $13.73 near upper band ($14.84) indicates overbought risk
• 30D MA: 13.51 (above current price) hints at near-term support

Newsmax’s technicals point to a short-term rally, with RSI at oversold levels and MACD divergence suggesting momentum. The stock’s 13.4% intraday surge has pushed it toward the upper Bollinger Band, but the 30D MA at $13.51 remains a critical support. For traders, the focus is on gamma-driven call options that benefit from price acceleration. Two top picks from the options chain stand out:

• NMAX20250822C14
- Type: Call
- Strike: $14
- Expiration: 2025-08-22
- IV: 68.20% (high volatility)
- Leverage Ratio: 45.58% (moderate)
- Delta: 0.402 (moderate sensitivity)
- Theta: -0.087 (rapid time decay)
- Gamma: 0.354 (high sensitivity to price moves)
- Turnover: $11,449 (liquid)
- Payoff at 5% Upside ($14.42): $0.42/share
- Why: High gamma and moderate delta make this ideal for a sharp move above $14.50, with IV at 68% reflecting market anticipation of volatility.

• NMAX20250822C13.5
- Type: Call
- Strike: $13.5
- Expiration: 2025-08-22
- IV: 50.49% (reasonable)
- Leverage Ratio: 32.56% (moderate)
- Delta: 0.602 (high sensitivity)
- Theta: -0.099 (rapid decay)
- Gamma: 0.478 (very high sensitivity)
- Turnover: $9,777 (liquid)
- Payoff at 5% Upside ($14.42): $0.92/share
- Why: Gamma of 0.478 and delta of 0.602 make this the top choice for a breakout above $14.50, with IV at 50% offering a balanced risk-reward profile.

Action: Aggressive bulls should target NMAX20250822C13.5 for a $14.50+ move, while NMAX20250822C14 offers a safer play if the stock consolidates near $14.20.

Backtest Newsmax Stock Performance
The backtest of NMAX's performance after a 13% intraday increase shows mixed results. While the stock experienced a significant one-day gain, the broader market trends over the following days were negative, leading to a overall decline in the 3-Day, 10-Day, and 30-Day returns. The maximum return during the backtest period was -3.30%, which occurred on the first day after the intraday surge, indicating that the positive momentum did not persist.

NMAX’s Legal Storm Clears—But the Sky Isn’t Entirely Clear
Newsmax’s 13.4% surge on the Dominion settlement is a short-term win, but the stock’s path forward hinges on its ability to sustain momentum above $14.50 and avoid a relapse into its 52-week low range. The options market’s focus on gamma-driven calls reflects high conviction in a breakout, but traders must watch for a breakdown below the 30D MA at $13.51. Meanwhile, the sector leader Comcast (CMCSA) is up 0.13%—a muted performance that underscores Newsmax’s divergence from broader cable & satellite trends. For now, the key is to monitor the $14.50 resistance and the 2025-08-22 options expiration cycle. Watch for a $14.50 close to confirm the bullish thesis.