Newsmax Surges 11% on Landmark Settlement: A New Chapter for Media Giants?

Summary
• Newsmax (NMAX) rockets 11.07% to $13.45, hitting an intraday high of $13.69
• $67M settlement with Dominion Voting Systems resolves a $1.6B defamation lawsuit
• Turnover spikes to 1.84% as investors react to legal clarity and strategic repositioning

Newsmax’s stock erupted in a dramatic 11% surge on Monday, fueled by the resolution of a high-stakes defamation lawsuit with Dominion Voting Systems. The settlement, paid in three installments over three years, marks a pivotal moment for the media giant. With a 52-week range of $11.40–$265, the stock’s sharp rebound from its intraday low of $12.13 signals a shift in market sentiment. The move contrasts with a broader media sector under pressure, as peers like Fox A (FOXA) falter, highlighting Newsmax’s unique catalyst-driven momentum.

Legal Resolution Sparks Investor Optimism
Newsmax’s 11% rally stems from its $67 million settlement with Dominion Voting Systems, ending a $1.6 billion defamation lawsuit tied to 2020 election coverage. The company emphasized the settlement allows it to focus on growth without the distraction of litigation in a court it deemed biased. While the payment will be funded through revenues over three years, the resolution eliminates a major overhang. Investors interpreted the move as a strategic win, validating Newsmax’s stance on journalistic standards and reducing uncertainty. The stock’s intraday high of $13.69 reflects a re-rating of its risk profile, with the settlement seen as a catalyst for renewed focus on its core media operations.

Media Sector Splits as Newsmax Defies Peers
The broader media sector remains fragmented, with Fox A (FOXA) declining 1.06% despite its own $787 million Dominion settlement in 2023. Newsmax’s sharp outperformance underscores its unique narrative: a legal resolution in a Delaware court it criticized as biased, coupled with a strategic shift to Florida incorporation. While peers face regulatory and reputational headwinds, Newsmax’s stock is trading on a short-term legal clarity premium, contrasting with the sector’s mixed performance.

Options Playbook: Leveraging Volatility and Gamma for Short-Term Gains
• MACD: -0.807 (Signal: -0.833, Histogram: 0.026) – Negative divergence but narrowing
• RSI: 24.02 – Oversold territory, suggesting potential rebound
• Bollinger Bands: $11.02 (Lower) to $14.84 (Upper) – Price near upper band, indicating overbought
• 30D MA: $13.51 – Current price slightly below, signaling short-term bearish bias

Newsmax’s technicals suggest a volatile short-term setup. The RSI at 24.02 indicates oversold conditions, while the MACD histogram’s narrowing suggests waning bearish momentum. Key levels to watch include the 30D MA at $13.51 and the Bollinger Upper Band at $14.84. The stock’s implied volatility (IV) remains elevated, with options like NMAX20250822C13 and NMAX20250822C13.5 offering high leverage and liquidity for directional bets.

Top Option 1: NMAX20250822C13
• Code: NMAX20250822C13
• Type: Call
• Strike: $13
• Expiry: 2025-08-22
• IV: 70.20% (High volatility)
• Leverage Ratio: 19.21% (Moderate)
• Delta: 0.678 (High sensitivity to price)
• Theta: -0.1125 (High time decay)
• Gamma: 0.324 (Strong sensitivity to price movement)
• Turnover: $18,681 (High liquidity)

This call option is ideal for capitalizing on a continuation of the post-settlement rally. The high delta and gamma ensure significant payoff if the stock breaks above $13.50, while the high IV reflects market uncertainty. A 5% upside to $14.12 would yield a payoff of $1.12 per contract, offering a 58% return on the premium paid.

Top Option 2: NMAX20250822C13.5
• Code: NMAX20250822C13.5
• Type: Call
• Strike: $13.5
• Expiry: 2025-08-22
• IV: 66.90% (Moderate volatility)
• Leverage Ratio: 33.62% (High)
• Delta: 0.4997 (Balanced sensitivity)
• Theta: -0.0968 (Moderate time decay)
• Gamma: 0.3788 (Strong sensitivity to price movement)
• Turnover: $9,361 (High liquidity)

This contract offers a balanced risk-reward profile. With a strike price near the 30D MA, it benefits from both a breakout above $13.50 and a rebound from oversold RSI levels. A 5% move to $14.12 would generate a $0.62 payoff, translating to a 184% return on the premium. Aggressive bulls should prioritize NMAX20250822C13 for immediate upside, while NMAX20250822C13.5 serves as a hedge against consolidation.

Backtest Newsmax Stock Performance
The backtest of NMAX's performance after a 11% 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 day 0, indicating that the immediate day following the intraday surge was the best performer in the short term. The backtest data suggests that while the stock had a strong initial reaction to the intraday increase, it could not sustain this momentum in the longer term, given the negative returns observed in the subsequent days.

Newsmax’s Legal Clarity: A Catalyst for Strategic Reentry
Newsmax’s 11% surge on the Dominion settlement signals a pivotal shift in investor sentiment, driven by reduced legal uncertainty and a repositioning in Florida. While the stock remains below its 52-week high of $265, the settlement’s three-year payment structure and the company’s emphasis on operational clarity position it for a strategic reentry into growth. The media sector’s mixed performance, with FOXA down 1.06%, highlights Newsmax’s unique catalyst-driven momentum. Investors should monitor the 30D MA at $13.51 and the Bollinger Upper Band at $14.84 for directional clues. For those seeking leverage, the NMAX20250822C13 and NMAX20250822C13.5 options offer high-gamma plays on a continuation of the post-settlement rally. With the settlement behind it, Newsmax’s focus on journalistic integrity and operational resilience could drive a sustained rebound—provided the broader media landscape remains supportive.