USA Rare Earth Plunges 13% Amid Geopolitical Uncertainty and Easing Trade Tensions

Summary
• USAR’s stock tumbles 13.46% intraday, trading at $32.49 after opening at $35.66
• Intraday range spans $31.40 to $35.92, with turnover surging to 27.7 million shares
• Sector peers like MP Materials (-9.92%) reflect broader rare earth sector volatility
• Trump’s conciliatory tone toward China and Beijing’s export controls drive market jitters

USA Rare Earth’s sharp selloff reflects a volatile interplay of geopolitical shifts and sector-specific risks. As U.S.-China trade tensions ease and Beijing tightens rare earth export controls, investors are recalibrating positions in critical minerals stocks. The stock’s 13.46% intraday drop underscores the fragility of momentum built on speculative bets about government backing and supply chain security.

Geopolitical Reassessment Sparks Selloff
The collapse in USAR’s price stems from a rapid recalibration of market expectations around U.S.-China trade dynamics. President Trump’s recent conciliatory remarks—suggesting cooperation rather than confrontation with China—have dimmed the urgency of rare earth supply chain security. Simultaneously, Beijing’s expanded export controls on 12 rare earth elements, effective December 1, have introduced regulatory uncertainty. These developments have eroded the bullish narrative that fueled USAR’s 94% surge over five weeks, as investors now question the sustainability of demand for U.S. rare earth producers.

Rare Earth Sector Volatility Intensifies as MP Materials Falters
The rare earth sector is in turmoil, with MP Materials (MP) declining 9.92% intraday, mirroring USAR’s downward spiral. Both stocks are reacting to the same geopolitical calculus: easing U.S.-China tensions reduce the perceived need for domestic alternatives to Chinese supply chains. However, USAR’s steeper decline reflects its higher speculative premium, as the company’s Texas and Oklahoma projects remain unprofitable and dependent on government partnerships. MP Materials, already producing rare earths, retains a more tangible revenue stream, offering a partial buffer against sector-wide jitters.

Options Playbook: Capitalizing on Volatility Amid Uncertainty
• RSI: 87.18 (overbought, suggesting exhaustion)
• MACD: 5.22 (bullish), Signal Line: 3.41, Histogram: 1.81 (declining)
• Bollinger Bands: Upper $37.95, Middle $22.88, Lower $7.81 (price near upper band)
• 30D MA: $19.94 (price above), 100D MA: $14.96

USAR’s technicals paint a mixed picture. While the RSI suggests overbought conditions and the MACD histogram is contracting, the stock remains near its 52-week high of $43.98. Key support levels at $31.50 and $30.50 are critical for near-term stability. The options chain reveals aggressive positioning:

• USAR20251024P31.5 (Put, $31.50 strike, 10/24 expiry):
- IV: 170.49% (elevated volatility)
- Leverage: 10.07% (moderate)
- Delta: -0.410 (sensitive to price drops)
- Theta: -0.1107 (moderate time decay)
- Gamma: 0.0427 (responsive to price swings)
- Turnover: 131,703 (liquid)
- Payoff (5% downside): $1.15 per contract (max profit if price falls to $30.87)
This put option offers a high-gamma, high-IV play for bearish traders, with liquidity to ensure execution.

• USAR20251024P32 (Put, $32 strike, 10/24 expiry):
- IV: 162.57% (high)
- Leverage: 9.77% (moderate)
- Delta: -0.434 (strong bearish bias)
- Theta: -0.101 (moderate decay)
- Gamma: 0.0454 (high sensitivity)
- Turnover: 146,250 (liquid)
- Payoff (5% downside): $0.65 per contract (profit if price drops to $30.87)
This contract balances leverage and liquidity, ideal for capitalizing on a potential breakdown below $32.

Aggressive bears should prioritize USAR20251024P31.5 for its high gamma and IV, while USAR20251024P32 offers a safer, more liquid alternative. A 5% downside scenario (to $30.87) could trigger meaningful payoffs, but traders must monitor Trump’s rhetoric and China’s export policy updates.

Backtest USA Rare Earth Stock Performance
I’m unable to finish the back-test because the data we just pulled does not include intraday high/low prices, so I can’t identify every ≥ 13 % plunge that happened within a single session.To move forward we have two practical options:1. Pull daily OHLC data that contains High and Low and approximate the intraday draw-down with (High − Low) ÷ High. • This detects sessions in which price fell 13 % (or more) from the day’s peak to its trough. • It is the usual way to study “intraday plunge” when only daily bars are available.2. If you need true intraday (e.g., minute-bar) data for higher precision, let me know and I’ll attempt to source that instead (it can be slower and, for thinly-traded stocks, may be incomplete).Which route would you like to take?

Watch for $31.50 Support and Sector Leadership Shifts
The selloff in USAR reflects a market grappling with the fragility of geopolitical-driven narratives. While the stock’s 52-week high of $43.98 remains a distant target, near-term stability hinges on holding key support levels like $31.50. The sector’s broader weakness—evidenced by MP Materials’ 9.92% decline—suggests that even established players are vulnerable to shifting trade dynamics. Investors should prioritize liquidity and volatility metrics in options strategies, as the path forward depends on whether Trump’s conciliatory tone persists or escalates. For now, monitor $31.50 and MP Materials’ resilience to gauge the sector’s direction.