USA Rare Earth Surges 10% on Strategic Expansion and Index Inclusion – What’s Fueling the Momentum?

Summary
• USA Rare Earth (USAR) surges 9.98% intraday to $18.41, hitting a 52-week high of $18.43
• Company accelerates Round Top project commercialization by two years, targeting late 2028 production
• Announces inclusion in Russell 2000 and Russell 3000 indexes effective December 22

USA Rare Earth’s stock has erupted on news of accelerated production timelines and index inclusion, with the rare earth miner trading near its 52-week high. The move follows a strategic pivot to fast-track its Texas-based Round Top project and a landmark addition to major Russell indexes, signaling institutional validation. With a 9.98% intraday gain and $8.68 million turnover, the stock’s volatility underscores its role in the U.S. push for rare earth independence.

Strategic Expansion and Index Inclusion Drive USAR's Rally
USA Rare Earth’s 10% intraday surge is fueled by two catalysts: a two-year acceleration of its Round Top project commercialization and inclusion in the Russell 2000 and Russell 3000 indexes. The company’s announcement to begin production by late 2028—two years ahead of prior plans—signals operational progress in a sector critical to U.S. supply chain security. Meanwhile, the Russell index inclusion, effective December 22, boosts institutional demand as the indexes guide $1.2 trillion in assets. These developments validate USAR’s strategic role in the rare earths space amid geopolitical tensions and China’s dominance in refining.

Industrial Metals Sector Gains Momentum as MP Materials Leads
The industrial metals sector has seen mixed momentum, with MP Materials (MP) rising 3.81% on its role in U.S. rare earth production. USAR’s 10% gain outpaces peers like Critical Metals (CRML) and United States Antimony (UAMY), reflecting its unique position in the rare earths value chain. The sector’s rally is driven by government-backed initiatives to diversify supply chains, with USAR’s index inclusion and production timeline acceleration acting as a tailwind.

Options and ETFs for Capitalizing on USAR's Volatility
• RSI: 60.93 (neutral) • MACD: -0.53 (bearish) • Bollinger Bands: $10.61–$18.53 (overbought upper band) • 200D MA: Not available • Gamma: 0.126 (high sensitivity) • Theta: -0.106 (rapid time decay)

USAR’s technicals suggest short-term bullish momentum amid index inclusion and production news. Key levels to watch include the $18.53 upper Bollinger Band and $15.63 30D MA. While the RSI remains neutral, the MACD histogram’s positive divergence hints at potential continuation. No leveraged ETF data is available, but the stock’s 7.9% turnover rate and 9.98% intraday gain indicate strong liquidity for options.

Top Options:
• USAR20251219C18 (Call): Strike $18, Expiry 12/19, IV 107.85%, Delta 0.602, Theta -0.111, Gamma 0.123, Turnover 208,421. High IV reflects market anticipation; Delta suggests moderate directional bias; Gamma and Theta indicate sensitivity to price/time decay.
• USAR20251219C18.5 (Call): Strike $18.5, Expiry 12/19, IV 109.71%, Delta 0.539, Theta -0.110, Gamma 0.124, Turnover 29,903. Similar to the $18 call but with tighter strike, offering higher leverage for a 5% upside scenario (target $19.33).

Payoff Estimation:
For USAR20251219C18: If USAR hits $19.33 (5% above $18.41), payoff = $1.33 per contract. For USAR20251219C18.5: Payoff = $0.83 per contract. Both options balance leverage and liquidity, ideal for capitalizing on the index inclusion narrative. Aggressive bulls may consider the $18.5 call into a test of the $18.53 upper Bollinger Band.

Backtest USA Rare Earth Stock Performance
The backtest of the USAR ETF after a 10% intraday increase from 2022 to the present shows favorable performance metrics. The 3-day win rate is 58.02%, the 10-day win rate is 55.56%, and the 30-day win rate is 79.01%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 38.55% over 30 days, suggesting that USAR can deliver significant gains following a 10% intraday surge.

Position for USAR's Next Move: Watch Index Inclusion and Production Timelines
USAR’s rally is underpinned by strategic production acceleration and institutional validation via Russell index inclusion. While technicals suggest short-term bullish momentum, investors should monitor the $18.53 upper Bollinger Band and $15.63 30D MA for directional clues. The stock’s 9.98% intraday gain and 7.9% turnover rate highlight its liquidity and relevance in the rare earths sector. Meanwhile, MP Materials (MP) leads the industrial metals sector with a 3.81% gain, underscoring the broader theme of U.S. supply chain resilience. Position for USAR’s next move by targeting the $18.5 call into a potential breakout above $18.53.