USA Rare Earth Plummets 13%: What's Behind the Sudden Freefall?

Summary
• USA Rare Earth (USAR) slumps 13.06% to $16.91, erasing $2.5B in market cap
• U.S.-China trade deal framework delays rare earth export curbs, triggering sector-wide selloff
• Technical indicators signal extreme bearish momentum (RSI: 14.32, MACD: -0.44)

USA Rare Earth’s 13% intraday collapse has sent shockwaves through the rare earth sector, with shares trading at their lowest level since June 2024. The selloff coincides with a U.S.-China trade agreement delaying Beijing’s rare earth export restrictions, undermining near-term demand for domestic producers. With the stock trading near its 52-week low and technical indicators flashing red, investors are scrambling to decipher whether this is a buying opportunity or a deeper crisis.

Trade Deal Easing Fears Undermines Rare Earths Sector
The U.S.-China trade framework announced this week has directly triggered USAR’s collapse. By delaying China’s rare earth export curbs for one year, the agreement reduces immediate supply chain risks that had previously driven demand for U.S. producers. This development negates a key tailwind for companies like USAR, which relies on geopolitical tensions to justify its premium valuation. Additionally, the deal’s focus on stabilizing trade relations has shifted capital away from speculative rare earth plays toward more established sectors. The stock’s 13% drop mirrors broader sector weakness, with peers like MP Materials (-7.85%) and Critical Metals (-8%) also retreating as investors unwind long positions.

Rare Earths Sector in Retreat as Trade Uncertainty Fades
The rare earths sector has historically traded at a premium during periods of U.S.-China tension, but today’s selloff reflects a recalibration of expectations. MP Materials, the sector’s largest player, has underperformed USAR despite its dominant Mountain Pass mine, signaling broader skepticism about the sector’s near-term prospects. Smaller players like NioCorp and Trilogy Metals have also fallen sharply, with volume surges indicating profit-taking after earlier rallies. The sector’s decline underscores a key theme: investors are prioritizing short-term stability over long-term geopolitical narratives.

Options Playbook: Navigating Volatility in a Bearish USAR
• RSI: 14.32 (oversold)
• MACD: -0.44 (bearish divergence)
• Bollinger Bands: $15.65 (lower band) vs. $16.91 (current price)
• 200-day MA: $16.88 (near-term support)

USAR’s technical profile suggests a continuation of the downtrend, with the 200-day moving average ($16.88) acting as a critical level. A break below $15.65 (lower Bollinger Band) could trigger a 10-15% extension in losses. For options traders, the most compelling plays are short-dated puts with high leverage and liquidity. Two top picks from the options chain:

• USAR20251107P17
- Type: Put
- Strike: $17
- Expiry: 2025-11-07
- IV: 152.19% (elevated volatility)
- Delta: -0.4685 (moderate sensitivity)
- Theta: -0.0448 (slow time decay)
- Gamma: 0.1316 (high sensitivity to price swings)
- Turnover: 203,463 (liquid)
- Why it works: This put offers 13.90% leverage and benefits from USAR’s current 5% downside trajectory. A 5% drop to $16.06 would yield a 158% payoff (max(0, $17 - $16.06)).

• USAR20251114P17.5
- Type: Put
- Strike: $17.5
- Expiry: 2025-11-14
- IV: 164.14% (extreme volatility)
- Delta: -0.5256 (strong directional bias)
- Theta: -0.0433 (slow decay)
- Gamma: 0.1222 (high responsiveness)
- Turnover: 29,831 (adequate liquidity)
- Why it works: This put’s 10.60% leverage and 158% implied volatility make it ideal for a 5% downside scenario. A drop to $16.06 would generate a 158% payoff (max(0, $17.5 - $16.06)).

Action: Aggressive bears should prioritize USAR20251107P17 for immediate exposure, while USAR20251114P17.5 offers a longer-term play if the selloff persists. Both contracts align with USAR’s technical breakdown and sector-wide bearish momentum.

Backtest USA Rare Earth Stock Performance
Below is an interactive event-study dashboard that summarises how USA Rare Earth (USAR.O) typically trades after suffering an intraday plunge of 13 % or more (Low vs. previous Close) during 2022-01-01 — 2025-11-03.Key takeaways (30-day holding horizon):• Average cum-return: +16.1 % vs benchmark +6.9 % • Win-rate improves from ~40 % on day 1 to >77 % by day 30. • Excess return becomes statistically significant from day 9 onward.Feel free to explore the interactive panel for day-by-day metrics, distribution charts, and significance tests.

Act Now: USAR at Critical Juncture—What to Watch
USAR’s 13% collapse signals a pivotal moment for the rare earth sector, with the U.S.-China trade deal acting as a catalyst for near-term profit-taking. While the stock’s oversold RSI and bearish MACD suggest further downside, the 200-day moving average ($16.88) and Bollinger Band support ($15.65) offer key levels to monitor. Investors should also track MP Materials’ performance (-7.85%) as a sector barometer. For those with a short-term bearish bias, the USAR20251107P17 put offers a high-leverage, liquid play on the expected continuation of the selloff. Watch for a breakdown below $15.65 or a shift in trade negotiations—either could redefine USAR’s trajectory in the coming weeks.