Bullish option traders are logging extraordinary gains in USA Rare Earth, Inc. (USAR) following one of the most significant federal industrial policy interventions in decades.
On Jan. 13, our Unusual Activity Service identified significant bullish call buying, with 3,500 20February 21 calls bought for $1.10-$1.22 above the existing open interest of 994 contracts, with USAR shares trading at $16.68-$16.89.
Those 20February 21 calls traded as high as $11.28 today with the stock at $31.70, delivering extraordinary returns of approximately 824.59% from the maximum entry price of $1.22. Meanwhile, USAR shares gained approximately 90.11% from the lowest entry level of $16.68, demonstrating how options can deliver dramatically amplified returns compared to simply owning the underlying stock.
This performance illustrates the exceptional power of options leverage when the directional thesis proves correct, though it’s important to note that this same leverage can work against traders when market moves go in the opposite direction.
$1.6 Billion Government Investment Transforms Company
The timing of the January 13th call buying proved remarkably prescient, as just two weeks later the company announced a landmark $1.6 billion investment package from the U.S. government. On January 26, 2026, USA Rare Earth confirmed its entry into a non-binding Letter of Intent with the Department of Commerce’s CHIPS Program, comprising $277 million in proposed federal funding and a $1.3 billion senior secured loan.
Under the agreement, the U.S. government will acquire a 10% equity stake through 16.1 million common shares and warrants to purchase another 17.6 million shares, both priced at $17.17—a 24% discount to the stock’s closing price the prior Friday. The government’s ultimate ownership could reach 8-16% on a fully diluted basis, making this the largest-ever federal intervention in the domestic critical minerals sector.
Commerce Secretary Howard Lutnick emphasized the strategic importance: “USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence.” Energy Secretary Chris Wright added, “Thanks to President Trump’s leadership, the Department of Energy is ending America’s reliance on foreign nations for the critical materials essential to our economy and national security.”
USAR shares surged following the announcement—to their highest level since October 2025—with year-to-date gains nearly doubling the stock price and pushing market capitalization close to $4 billion. For traders positioned in the February 20th expiration calls, the government backing effectively de-risked the company’s entire capital structure and accelerated its timeline to commercial production.
Concurrently, USA Rare Earth announced a separate $1.5 billion PIPE (private investment in public equity) transaction, issuing 69.8 million shares at $21.50 per share to Inflection Point and other strategic investors, expected to close January 28, 2026. Combined with the government package, total capital raising reaches $3.1 billion—transforming USAR from a development-stage mining company into America’s flagship critical minerals producer backed by unprecedented federal support.
The convergence of the $1.6 billion government investment, $1.5 billion PIPE, U.S. government equity ownership, and Trump administration’s mineral sovereignty strategy created ideal conditions for the February 20th call options to capture extraordinary upside. The timing of the call buying on January 13th at 2:37 PM—positioned just 13 days before the transformational government deal announcement—demonstrates the exceptional nature of the unusual options activity that preceded one of 2026’s most dramatic industrial policy interventions.
USAR was last up 14.31% at $28.38.
