American Resources Soars 28%—What’s Driving the Surge?

• AREC spikes 28.1% to $1.11, hitting a session high of $1.14 after a rare earth grant announcement.
• Previous close: $0.8662; today’s open: $1.03; 52-week high: $1.68.
• Sector: Metals & Mining (MP Materials up 50.6% today).

The stock’s explosive rally ties to an after-hours catalyst: a $911k Indiana grant to its ReElement division for high-purity rare earth recycling. Traders now assess whether this signals a turning point for AREC’s electrification supply chain plays.

Indiana Grant Sparks Rare Earth Optimism
The 28% surge traces directly to ReElement Technologies’ $911,519 grant from Indiana’s government, targeting 99.99%+ purity rare earth recycling. This aligns with AREC’s core strategy of supplying critical minerals for EV magnets and batteries. The funding validates its technical capabilities in a sector starved for scalable purification solutions, potentially unlocking partnerships or policy tailwinds. The stock’s sharp reaction suggests traders view this as a credibility milestone for its electrification pivot, contrasting with prior struggles reflected in its negative PE ratio.

Bullish Tech Setup and Option Plays to Watch
Technicals:
• RSI: 57.5 (neutral, no overbought signals).
• Bollinger Bands: Current price ($1.11) exceeds upper band ($1.046), signaling breakout momentum.
• 200-day MA: $0.837 (far below, confirming trend shift).
• MACD: Histogram at 0.0135 (bullish divergence from price action).

Bulls target resistance at $1.14 (session peak) and $1.68 (52-week high). Traders should watch $0.91 (intraday low) as key support. For options:

1. AREC20250815C1 (Call, $1 strike):
- IV: 103.08% (high volatility premium).
- Delta: 0.69 (69% price sensitivity).
- Theta: -0.0024 (moderate time decay).
- Gamma: 0.98 (strong price responsiveness).
- Leverage: 5.55% (mid-range).
- Play: Buy for a $1.11+ rally; payoff hits $0.11 if shares hit $1.20 by expiry.

2. AREC20251017C1 (Call, $1 strike):
- IV: 108.97% (premium pricing).
- Delta: 0.687 (near-max sensitivity).
- Turnover: 6,070 (high liquidity).
- Gamma: 0.56 (steady upside exposure).
- Play: Long-dated leverage for Q4 rallies; breakeven at $1.11 + premium paid.

Bullish verdict: Aggressive traders buy AREC20250815C1 on dips below $0.10; patient investors hold the October call through earnings.

Backtest American Resources Stock Performance
The backtest of AREC's performance after a 28% intraday surge shows mixed results. While the stock experienced a significant one-day gain, the overall short-term performance was relatively modest, and the win rates for various time frames were not exceptionally high.

AREC’s Rare Earth Moment—Hold the Rally or Rotate?
This move isn’t just noise—Indiana’s grant and AREC’s rare earth focus align with $117.7M analyst revenue targets for 2025. Yet traders must monitor execution risks: its Q2 EPS estimates still sit at -$0.05. Watch for MP Materials (MP +50.6%) to set sector tone, as cobalt bans and EV battery demand ripple through the space. For now, the stock’s 28% surge suggests a short-term buy, but bulls must defend $1.00 or risk a reversion to $0.83 lows. Trade with tight stops—this rare earth race is volatile but full of promise.