USA Rare Earth Plunges 9.3%—Is the Rare Earth Sector Shifting Gears?

Summary
• USA Rare Earth (USAR) slumps 9.3% to $13.53, breaking below its 52-week low of $5.56
• Sector peers like MP Materials (MP) also retreat, with MP down 6.5%
• Options volatility surges, with 2025-09-19 put options at 14 striking 110.58% implied volatility
• A rare earth supply deal by Vulcan Elements sparks investor anxiety over pricing pressures
Today’s sharp selloff in USAR reflects a sector-wide recalibration amid competitive dynamics and technical exhaustion. The stock’s collapse into the lower Bollinger Band and bearish MACD crossover signal a critical juncture for rare earth producers.

Competitive Pricing Pressures Trigger Flight
The selloff stems from Vulcan Elements’ rare earth supply deal with ReElements, which reportedly priced oxides below the $110/kg floor set by the U.S. Department of Defense for MP Materials. This signals a potential devaluation of rare earth contracts, eroding margins for USAR and peers. With USAR’s Round Top Mountain project still years from production, investors are recalibrating expectations amid aggressive pricing from established players. The stock’s 9.3% drop mirrors broader sector jitters, as seen in MP’s 6.5% decline.

Rare Earth Sector Under Pressure as MP Materials Leads Retreat
The Other Industrial Metals & Mining sector is broadly underperforming, with MP Materials (MP) down 6.5% and Critical Metals (CRML) falling 7.5%. USAR’s 9.3% drop outpaces peers, reflecting its speculative profile and lack of near-term revenue. The sector’s beta of 0.69 suggests it’s less volatile than the S&P 500, yet today’s selloff indicates a shift in risk appetite. MP’s dominance in U.S. rare earth processing makes its performance a bellwether for the sector’s health.

Bearish Technicals and Volatility-Driven Options Playbook
• 200-day MA: Empty (no trend reference)
• 30D MA: 14.58 (above current price)
• RSI: 47.93 (neutral to bearish)
• MACD: 0.53 (bearish crossover)
• Bollinger Bands: 12.95–18.33 (price near lower band)
• Gamma: 0.1196–0.1573 (high sensitivity to price swings)
• Theta: -0.0175–-0.0765 (accelerating time decay)
• Implied Volatility: 99.90%–119.47% (extreme)
• Turnover: 4.4M (high liquidity)
• Leverage Ratio: 7.19%–18.35% (moderate to high)
• Delta: -0.37–0.62 (mixed directional exposure)
• Price Change Ratio: -44.24%–92.86% (volatile)
• Key Levels: 13.47 (intraday low), 14.57 (intraday high), 15.64 (30D MA)
• Short-term Outlook: Bearish continuation below 14.57, with 12.95 as critical support
• Options Focus: 2025-09-19 contracts (high liquidity and volatility)
• Top Put: USAR20250919P14 (strike 14, IV 110.58%, delta -0.497, theta -0.0175, gamma 0.1196, turnover 249,976) – High leverage (8.76%) and liquidity for bearish bets
• Top Call: USAR20250919C14.5 (strike 14.5, IV 106.27%, delta 0.440, theta -0.047, gamma 0.123, turnover 8,921) – Moderate delta for potential rebounds
• Payoff Estimation: 5% downside to $12.85 yields $1.15 profit for the put (max(0, 14 - 12.85)) and $0.65 loss for the call (max(0, 12.85 - 14.5)).
• Action: Aggressive short-side positioning via the 14 put, with tight stops above 14.57. Bulls may test the 14.5 call if the stock bounces off 12.95.

Backtest USA Rare Earth Stock Performance

Rare Earth Sector at Inflection Point—Act Fast on Key Levels
The rare earth sector faces a pivotal moment as pricing pressures and technical exhaustion collide. USAR’s 9.3% drop highlights the urgency for clarity on competitive contracts and production timelines. Investors should monitor MP Materials (-6.5%) as a sector barometer and watch USAR’s 12.95 support level. A breakdown below this could trigger a 52-week low test, while a rebound above 14.57 may reignite speculative fervor. For now, bearish options like USAR20250919P14 offer high leverage on a deteriorating technical backdrop. Watch for sector-wide margin compression or a rebound in DoD-backed pricing to dictate next steps.