USA Rare Earth Surges 11.7% on Venezuela Geopolitics and Supply Chain Hopes

Summary
• USA Rare Earth (USAR) rockets 11.7% intraday to $17.645, driven by Venezuela’s regime shift and accelerated Round Top project timelines.
• Turnover surges to 12.65 million shares, with 52-week high at $43.98 and 52-week low at $5.56.
• Sector peers like MP Materials (MP) rally 2.66%, reflecting rare earth supply chain anxiety.
• Options volatility spikes, with implied volatility ratios hitting 150.80% on deep out-of-the-money puts.
Today’s explosive move in USAR underscores a confluence of geopolitical speculation and operational progress. The stock’s 11.7% surge, fueled by Venezuela’s political upheaval and the company’s Stillwater magnet plant advancements, has ignited a frenzy in options markets and sector-wide momentum.

Venezuela Regime Change Fuels Rare Earth Supply Chain Optimism
The 11.7% intraday surge in USAR is directly tied to the U.S. military’s seizure of Venezuelan President Nicolás Maduro and the subsequent geopolitical repositioning. Markets are interpreting this as a potential catalyst for accessing Venezuela’s Orinoco Mining Arc, which holds 300,000 metric tonnes of rare earth deposits—including neodymium critical for USAR’s Oklahoma magnet plant. This aligns with the company’s accelerated Round Top project timeline and its acquisition of Less Common Metals, which de-risks its rare earth extraction technology. While the Venezuela angle adds speculative momentum, the core driver remains the company’s push to establish a U.S.-based rare earth supply chain amid China’s 90% global dominance.

Rare Earth Sector Rally: USAR Outpaces MP Materials
The rare earth sector is experiencing a coordinated rally, with MP Materials (MP) up 2.66% on the same day. However, USAR’s 11.7% surge dwarfs MP’s gains, reflecting its speculative exposure to Venezuela’s geopolitical shifts and its aggressive vertical integration strategy. Nevada Lithium’s recent discovery of rare earth elements in its lithium project further underscores the sector’s focus on diversifying supply chains. USAR’s outperformance highlights its dual narrative: geopolitical tailwinds and operational progress at Stillwater, which positions it as a high-risk, high-reward play compared to more established peers like MP.

Options Volatility and Technicals: Navigating USAR’s Volatile Move
• MACD: -0.67 (Signal Line: -0.80, Histogram: 0.13) suggests short-term bullish momentum.
• RSI: 44.53 (neutral) indicates no overbought/oversold extremes.
• Bollinger Bands: Price at $17.645 is near the upper band ($18.78), signaling potential overextension.
• 200D MA: $14.42 (below current price), 100D MA: $17.78 (near term resistance).
• Key Levels: Support at $13.41–$13.55, resistance at $18.78–$19.00.
• Options Liquidity: High turnover in the $15–$16 strike range, with USAR20260116C15 (strike $15) seeing 352,924 shares traded.
• IV Environment: Implied volatility ratios range from 115%–150.80%, reflecting heightened speculative activity.
Top Options Picks:
1. USAR20260116C15 (Call, $15 strike, 1/16/2026):
• IV: 116.20% (high volatility)
• Leverage Ratio: 5.70%
• Delta: 0.8199 (high sensitivity to price moves)
• Theta: -0.0858 (rapid time decay)
• Gamma: 0.0737 (accelerating delta)
• Turnover: 352,924 (extremely liquid)
• Payoff at 5% Upside: $1.64 per contract (max(0, 18.527 - 15)).
This call is ideal for aggressive bulls betting on a continuation of the Venezuela-driven rally. The high delta and gamma ensure rapid payoff if the stock breaks above $18.78.
2. USAR20260116C15.5 (Call, $15.5 strike, 1/16/2026):
• IV: 115.66%
• Leverage Ratio: 6.66%
• Delta: 0.7749
• Theta: -0.0900
• Gamma: 0.0846
• Turnover: 30,023
• Payoff at 5% Upside: $2.02 per contract (max(0, 18.527 - 15.5)).
This contract offers a balance of leverage and liquidity, with a lower strike price to capture broader upside potential. The 6.66% leverage ratio amplifies returns if the stock consolidates above $15.50.
Trading Setup: Aggressive bulls should target a breakout above $18.78 (Bollinger upper band) with USAR20260116C15. Cautious traders may use USAR20260116C15.5 as a lower-cost entry if the stock retests $15.50 support. Both contracts benefit from the sector’s supply chain anxiety and Venezuela’s geopolitical narrative.

Backtest USA Rare Earth Stock Performance
The backtest of USAR's performance after a 12% intraday increase from 2022 to now shows favorable results. The 3-Day win rate is 53.41%, the 10-Day win rate is 51.14%, and the 30-Day win rate is 70.45%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 34.83% over 30 days, suggesting that USAR can deliver significant gains even after the initial surge.

Geopolitical Tailwinds and Operational Risks: What to Watch Next
USAR’s 11.7% surge is a high-stakes bet on Venezuela’s political realignment and its ability to secure rare earth supply chains. While the stock’s technicals suggest overextension near $18.78, the options market’s elevated volatility and sector-wide momentum indicate sustained interest. Investors must monitor the stability of Venezuela’s new regime and the progress of USAR’s Stillwater plant, which remains its core value driver. MP Materials’ 2.66% gain highlights the sector’s broader appeal, but USAR’s speculative edge makes it a double-edged sword. For now, watch for a breakdown below $13.41 support or a breakout above $18.78 to confirm the move’s sustainability. Aggressive bulls may consider USAR20260116C15 into a test of $18.78 resistance.