USA Rare Earth Skyrockets 8.77%—Is This the Dawn of a New Rare Earth Era?

Summary
• USA Rare Earth (USAR) surges 8.77% to $16.36, breaking through intraday highs of $16.73 and lows of $15.23
• Trump’s rare earth policy push and MP Materials’ 4.35% rally signal sector-wide momentum
• Options chain shows 154,000+ contracts traded, with 136%+ implied volatility on key strikes

USA Rare Earth’s explosive 8.77% intraday surge has ignited a rare earth sector rally, driven by Trump’s aggressive push to reduce China’s dominance in critical minerals. With MP Materials (MP) surging 4.35% and Greenland’s Tanbreez project gaining traction, the stock’s 12.8% turnover rate and 7.6x dynamic P/E suggest a strategic inflection point. Traders are now scrambling to position for a potential 37.48% 3-month target, as geopolitical tailwinds and technical buy signals converge.

Trump’s Rare Earth Push Ignites Market Optimism
The 8.77% surge in USAR is directly tied to Trump’s executive actions targeting rare earth supply chain independence. Recent news highlights Trump’s focus on subsidies, price guarantees, and government contracts for domestic producers, with USA Rare Earth positioned as a key beneficiary. The stock’s 13.49% intraday volatility and 12.11% weekly average volatility align with heightened speculative activity, as investors anticipate near-term policy-driven capital inflows. Additionally, the company’s recent partnership with Moog for U.S.-made neo magnets and its $15.04 closing price on Thursday (up 11.82%) have amplified short-term bullish momentum.

MP Materials Leads Rare Earth Sector Amid Geopolitical Tailwinds
MP Materials (MP), the sector’s dominant player, surged 4.34% intraday, outpacing USAR’s 8.77% but reflecting broader sector strength. Both stocks benefit from Trump’s rare earth initiatives, though MP’s 4.34% gain contrasts with USAR’s sharper move, likely due to MP’s established production at Mountain Pass. The sector’s strategic importance is underscored by Greenland’s Tanbreez project and China’s recent export restrictions, creating a dual narrative of geopolitical urgency and supply chain diversification.

Options Playbook: Leverage USAR’s Volatility with Gamma-Driven Calls
• MACD: 0.568 (above signal line 0.399), Histogram: 0.168 (bullish divergence)
• RSI: 52.3 (neutral), Bollinger Bands: 16.09 (upper), 13.19 (middle), 10.28 (lower)
• 30D MA: $12.33 (below price), 100D MA: $11.02 (below price)

USAR’s 16.36 price sits above its 52W low of $5.56 and 52W high of $20, with a 7.6x P/E suggesting undervaluation. The 16.36 level is critical, as a break above 16.73 (intraday high) could trigger a 20.00% move to $20.00, aligning with the 37.48% 3-month target. Two options stand out for aggressive positioning:

• USAR20250815C16: Call option with 16.00 strike, 152.84% IV, 0.5819 delta, 0.1218 theta, 0.1202 gamma, 131,608 turnover. This contract offers 42.86% leverage and 11.18% gamma, ideal for capitalizing on a 5% upside (target $17.18). Payoff: max(0, 17.18 - 16.00) = $1.18/share.
• USAR20250815C16.5: Call option with 16.50 strike, 152.65% IV, 0.5284 delta, 0.1300 theta, 0.1078 gamma, 73,551 turnover. This 50.54% leverage ratio and 11.66% gamma position is optimal for a 5% upside (target $17.18). Payoff: max(0, 17.18 - 16.50) = $0.68/share.

Aggressive bulls should prioritize USAR20250815C16 for its high gamma and liquidity, while USAR20250815C16.5 offers a balanced risk-reward profile. Both contracts benefit from USAR’s 136%+ implied volatility and 12.8% turnover rate, making them prime candidates for a continuation of the 8.77% rally.

Backtest USA Rare Earth Stock Performance
The backtest of USAR's performance after a 9% intraday surge shows favorable results, with the 3-Day win rate at 45.71%, the 10-Day win rate at 42.86%, and the 30-Day win rate at 82.86%. The maximum return during the backtest period was 42.23%, which occurred on day 59, indicating that USAR can continue to perform well in the short to medium term following a significant intraday surge.

Bullish Momentum Unlikely to Subside—Act Now on Rare Earth Rally
USA Rare Earth’s 8.77% surge is a harbinger of a broader rare earth sector boom, fueled by Trump’s policy tailwinds and MP Materials’ 4.34% rally. With USAR trading at 7.6x P/E and a 37.48% 3-month target, the stock’s 16.36 level is a critical inflection point. Traders should hold long positions above 14.26 support and consider the USAR20250815C16 call for leveraged exposure. The sector’s strategic importance—bolstered by Greenland’s Tanbreez project and China’s export restrictions—ensures volatility will persist. Watch for a break above 16.73 to confirm the 20.00 target, and act decisively on the 16.36-16.73 range.