You want to run the wheel strategy on rare-earth stocks with $ 6K-$10K. Two names matter: MP Materials (MP) and Energy Fuels (UUUU). Everything else is either too small, too illiquid, or not actually a rare earth play. MP is the buttoned-up choice backed by the Pentagon. UUUU is the scrappy dual-threat that also makes uranium. SLV will pay you fat premiums to hold your beer while silver crashes 30% in a day. Choose wisely.

Both stocks let you sell options for 3-5% monthly premiums because implied volatility sits where it belongs: elevated, angry, and reflective of the fact that China controls 90% of global rare earth processing and has weaponized it before. Welcome to the wheel strategy in a sector where "supply chain resilience" is government-speak for "we're kind of screwed without these guys."

The wheel strategy is beautifully simple until it isn't. You sell cash-secured puts until you get assigned shares, then you sell covered calls until they get taken away. Rinse, repeat, collect premiums. It works best when three things align: decent options liquidity so you're not trading against yourself, enough volatility to make the premiums worth your time (20-60% implied vol), and an underlying asset you don't mind owning if things go sideways.

For rare earths specifically, this means harvesting premiums amid the same geopolitical tensions that keep defense analysts up at night. China export restrictions, U.S. supply chain reshoring, and Department of Defense contracts with guaranteed price floors, these aren't abstract macro trends. They're the reason your 45-day covered call is generating 4% while Treasury bills are asleep at 4.5% annualized. The strategy doesn't require you to time China's next rare-earth quota announcement perfectly. It just asks if you're okay owning these stocks while collecting rent.

The Pitch:

MP Materials operates the only integrated rare-earth operation in North America. They mine at Mountain Pass in California, process in Fort Worth, Texas, and they're building a commercial magnet production that goes live in 2026. The Department of Defense has already locked in 7,000 tonnes of magnets through 2028 at a $110/kg price floor, the kind of contract that makes investors sleep better and commodity traders weep. Apple signed on for 100% recycled rare-earth magnets. The U.S. government owns 15% of the company via a $400M equity stake.

This is as close to a "safe" rare earth bet as exists, which is like being the tallest jockey.

Options Setup:

MP's options market is liquid enough to trade without pain. Weekly expirations, high open interest, bid-ask spreads that don't rob you blind across multiple strikes. Implied volatility currently sits at 77.90% with an IV rank around 40% right in the sweet spot for the wheel after recent spikes. February 2026 options show real volume: the Feb 6 expiration alone has 1,600+ contracts of open interest at the $70 strike.

Selling a 30-delta covered call around the $72 strike with 30-45 days to expiration generates roughly $2.50-3.50 in premium. On a $65 stock, that's 3.8-5.4% per cycle. Annualized if you never get assigned: 46-65% return on capital. Of course, your upside is capped at the strike, and you'll spend weekends wondering if you should've just held.

What Could Go Wrong:

Stage III magnet production is capital-intensive and unproven at commercial scale. They're projecting returns on invested capital above 10%, but projections are where dreams go to get marked to market. Rare-earth prices, especially neodymium-praseodymium, remain volatile because China can flood the market at any time it feels geopolitically frisky. At 120x projected 2028 free cash flow, the market has already priced in a lot of execution heroics.

Also, despite all the talk about domestic processing, 50% of rare earth concentrates are shipped to China anyway. Supply chain independence is more aspirational than actual.

Capital Needed: 100 shares = ~$6,000-7,000

Wheel Score: 9/10 – Best liquidity, actual government backing, pure rare earth exposure, and you won't need to take a second mortgage.

The Pitch:

Energy Fuels operates the only conventional uranium mill in the United States at White Mesa, Utah. They're also scaling commercial rare earth separation from monazite byproducts, which means you're getting dual exposure to the nuclear renaissance and rare earth supply chain onshoring in one moderately volatile package. They're piloting heavy rare-earth separation dysprosium, terbium, the stuff China controls with 90%+ market share and charges accordingly.

This is the diversification play for people who think uranium and rare earths might both matter in a decade that takes energy security seriously.

Options Setup:

UUUU options show good to excellent liquidity with weekly expirations and implied volatility that's frankly absurd. Current IV ranges 90-154% across the chain, 84.52 percentile, which means the market is pricing in either a moon mission or a crater. The Feb 27, 2026, expiration shows the $19.50 call near the money bid at $2.14, yielding 11% on a covered call. Annualize that if unassigned, and you're looking at 80%+ YieldBoost.

This exceptional premium reflects IV well above the ideal 30-60% range, which means two things: you're getting paid handsomely right now, and eventually volatility will collapse, leaving future premiums looking sad.

What Could Go Wrong:

Rare earth separation is still ramping. Commercial-scale heavy rare earth production remains unproven, and UUUU can't match MP's integrated magnet production; they're stuck upstream. Uranium cyclicality could offset rare-earth gains if uranium prices weaken from current levels. At 156x forward P/E, you're paying early-stage speculative pricing for a company that might scale or might not.

Also, when IV compression happens, and it will, those fat premiums will shrink fast.

Capital Needed: 100 shares = ~$2,200-2,400 (cheapest quality option available)

Wheel Score: 8.5/10 – Lower capital, higher premiums, clean balance sheet, but more volatility and execution risk than you'd prefer.

What It Is:

SLV offers pure silver bullion exposure without the operational risk of running an actual mine. The ETF structure delivers exceptional liquidity with over 6.8M shares traded daily, and the options market is among the deepest globally. If you want to sell premium, SLV will pay you.

The Premium Reality:

SLV trades at 95.28% implied volatility with an 82.4% IV rank, which is extremely elevated even by 2025 standards. This reflects silver's 145% rally followed by a 2026 crash from $104 back to $75. A Feb 23 $40.50 put, sitting 6% out of the money, generates $2.84 in premium 7.01% YieldBoost.

Here's the problem: silver dropped 30% in a single day in late January 2026. The wheel strategy assumes moderate, tradable volatility. SLV's price action over six months has been $43 → $104 → $75, which violates every assumption underpinning mechanical options selling.

The Verdict:

Only suitable if you have a strong precious metals conviction and can tolerate 20-40% intra-month drawdowns without panic-selling at the bottom. The premiums are real. So is the risk of getting assigned at $90 while silver trades at $60. Not recommended for anyone treating this as a systematic strategy rather than a macro bet.

What It Is:

COPX provides diversified copper mining exposure with 64.4% implied volatility and solid options liquidity. Recent flow shows 78.1% call volume in delta 40-60 options, suggesting institutions are positioning for copper's EV and infrastructure demand thesis.

The Mismatch:

Copper is critical for electrification. Copper is not a rare earth element. COPX holdings Freeport-McMoRan and Southern Copper have minimal rare-earth operations. While copper benefits from similar clean energy tailwinds, it lacks the strategic government backing that de-risks MP and UUUU. No DoD contracts, no price floors, no Pentagon equity stakes.

The Verdict:

Strong wheel candidate in absolute terms, good liquidity, moderate IV, diversified risk but thematically misaligned. If you wanted copper exposure, you wouldn't be reading a rare earth newsletter.

What It Is:

REMX holds a globally diversified rare earth portfolio: 32% in China (despite geopolitical tensions), 20% in Australia, 18% in the U.S. (including 12% MP Materials), and 13% in Canada. Year-to-date 2026 performance is +26%, with a 146% rally since April 2025, reflecting sector momentum.

The Options Problem:

REMX options exist but lack the liquidity and volume of MP or UUUU. Bid-ask spreads widen, open interest drops, and you're trading against market makers who know you need them more than they need you. Implied volatility tends to run lower than single-name stocks because diversification dampens swings great for risk management, terrible for premium generation.

The Diversification Tax:

By spreading exposure across continents and companies, REMX smooths returns but dilutes potential upside. You get rare earth sector exposure without concentration risk, but you also give up the option income that makes the wheel strategy attractive in the first place. If your goal is to own the sector passively, REMX is a good option. If your goal is to generate 3-5% monthly premiums, it doesn't.

The Verdict:

Acceptable for diversification-focused investors seeking rare-earth beta without stock-specific risk. Inferior for wheel strategy execution due to options liquidity constraints and lower IV.

Infrastructure & Energy Alternatives (IE): Pre-revenue. The options market is basically one guy in his basement hoping someone calls.

Plateau Metals (PLTM): Insufficient liquidity. You'll get quoted a bid-ask spread wider than the Grand Canyon.

Silver Peak Mines (SLVP): Limited data, poor performance, no meaningful options activity.

GLD (Gold ETF): Capital prohibitive. You'd need $40K+ for 100 shares, which prices out the audience this analysis was written for.

Agnico Eagle Mines (AEM): Gold miner, not rare earth. Wrong commodity, wrong thesis.

China controls 85-90% of global rare earth refining capacity. This isn't a market structure that evolved organically; it's the result of decades of strategic investment while Western companies decided rare earths were too dirty, too capital-intensive, and too low-margin to bother with.

Then China restricted gallium and germanium exports in July 2023, cut rare earth export quotas in December 2024, and reminded everyone that supply chain dependence is a feature, not a bug. The U.S., Australia, and Canada suddenly rediscovered the strategic importance of neodymium magnets for F-35 fighters, Virginia-class submarines, and every wind turbine and EV motor worth building.

The Department of Defense locked MP Materials into a 7,000-tonne magnet supply agreement through 2028 with a $110/kg price floor. The U.S. government took a 15% equity stake via $400M in funding. Congress allocated $35M to Energy Fuels for heavy rare-earth separation pilot programs. These aren't handouts, they're strategic hedges against the risk that the next geopolitical crisis leaves U.S. defense contractors waiting on Beijing's export approval.

This government backing de-risks the investment thesis in ways commodity bulls aren't used to seeing. When the DoD commits to buying magnets at $110/kg regardless of spot-market pricing, MP's downside is capped in ways pure-play mining companies never experience. That price floor is worth something specifically; it's worth lower implied volatility than fundamentals alone would suggest.

China's rare earth export restrictions look effective until you remember that rare earths are an export industry. China produces neodymium-praseodymium alloy for global sale. Restricting exports reduces revenue, strains production capacity, and accelerates the development of Western supply chains. The export quotas create short-term leverage but long-term strategic substitution.

Japan faced this exact dynamic after China restricted exports in 2010. Japan responded by funding Lynas Rare Earths in Australia, reducing Chinese imports from 90% to 60% over a decade. The U.S. is running the same playbook now, except with DoD contracts and equity stakes instead of bilateral trade agreements.

China's strategic dilemma: Squeeze supply too hard, and Western capacity scales faster. Flood the market with cheap supplies, and Western projects go bankrupt before reaching commercial production. They've chosen volatility, which creates the exact conditions that make the wheel strategy viable.

Neodymium-praseodymium oxide (NdPr) is the rare earth that actually matters for permanent magnets. Its price history looks like an EKG chart for someone having a bad day:

MP's DoD price floors protect contracted production, but broader market pricing still affects profitability. A surge in Chinese production could push NdPr below $50/kg, rendering non-protected output uneconomical. The wheel strategy doesn't eliminate commodity risk it just lets you collect premiums while waiting to find out if prices hold.

U.S. rare earth projects face stringent environmental reviews because heavy rare earth separation generates radioactive waste from thorium byproducts. Specialized disposal permits are required, activist opposition is guaranteed, and timelines stretch beyond investor patience.

Energy Fuels' White Mesa mill already has infrastructure to handle radioactive materials from uranium processing, giving it a permitting advantage. MP's Stage III magnet facility required years of approvals and Goldman Sachs debt financing. These aren't software companies iterating features they're industrial processors navigating NEPA compliance.

Regulatory delay risk means production ramps take longer than management guidance suggests, pushing cash flow inflection points right and keeping valuations elevated longer than fundamentals justify.

Option premiums from covered calls held less than one year are taxed as short-term capital gains at ordinary income rates up to 37% federal. A 5% gross premium becomes 3.15% net after tax in the highest bracket. This is material.

If you're running the wheel in a taxable account, you're getting hit with short-term rates on every expiration unless you get assigned and hold shares long enough for long-term treatment (which defeats the wheel strategy's purpose).

If assigned on a covered call, the sale of underlying shares resets the holding period. Frequent assignments prevent long-term capital gains qualification (15-20% rate). Investors in high tax brackets should consider:

GLD and SLV are taxed as collectibles at a 28% maximum rate rather than as securities. This makes them less tax-efficient than MP or UUUU for wheel strategies, which is another reason to avoid the precious metals plays unless you have a strong conviction.

Who You Are: Bullish on U.S. supply chain reshoring, 5-10 year horizon, moderate risk tolerance

Allocation:

Expected Outcome: 15-25% annualized return if the thesis plays out. Option premiums offset 30-50% of downside if rare earths crater. You'll spend a lot of time explaining rare earths at dinner parties.

Who You Are: Retiree seeking yield, limited risk tolerance, cannot afford >20% drawdowns

Allocation:

Expected Outcome: 8-12% annualized yield from option premiums plus dividends. Rare earth exposure is limited to affordable position sizes that won't ruin retirement if China floods the market.

Who You Are: High conviction in rare earth shortage, willing to accept 40%+ volatility, possibly unhinged

Allocation:

Expected Outcome: 30-60% annualized upside potential if the trade works. 50% risk of drawdown if commodities correct. You'll either retire early or learn humility. Possibly both.

Primary Recommendation:

Buy 100 shares of MP Materials (~$6,000-7,000) and run the wheel with 30-delta covered calls at 35-45 DTE. MP's government backing, operational scale, and options liquidity make it the highest-quality rare earth play available. Accept near-term volatility. Use assignments as opportunities to reset the cost basis to a lower amount.

Secondary Recommendation:

Buy 100 shares UUUU (~$2,200-2,400) as a complementary position. Higher implied volatility generates 1.5-2x the premiums of MP, compensating for smaller capital allocation. Dual uranium/rare-earth exposure provides diversification from pure rare-earth commodity risk.

What to Avoid:

Conditional Plays:

[ ] Verify options bid-ask spread <5% of premium
[ ] Check IV percentile rank (ideal: 40-70th percentile)
[ ] Review upcoming earnings dates (don't sell calls <21 days before earnings)
[ ] Confirm position size <10% of portfolio

[ ] If stock near support: sell cash-secured put at 0.30 delta
[ ] If stock near resistance: buy shares directly, immediately sell covered call
[ ] Set calendar reminder for 21 DTE to evaluate roll/close decision

[ ] Weekly: monitor stock price relative to strike (prepare to roll if approaching)
[ ] Monthly: review sector news (China policy, DoD announcements, commodity prices)
[ ] Quarterly: reassess fundamentals (earnings, production updates, contract wins)

[ ] Close position if fundamental thesis breaks (e.g., DoD contract cancellation)
[ ] Reduce allocation if sector becomes >30% of portfolio due to appreciation
[ ] Switch to REMX if individual stock risk becomes uncomfortable

The rare earth sector in 2026 presents a compelling wheel strategy opportunity driven by structural tailwinds that don't rely on market sentiment or technical analysis. U.S. government de-risking through DoD contracts and equity stakes, China export restrictions validating Western supply chain development, and clean energy demand growth for permanent magnets, these are secular trends playing out over years, not quarters.

MP Materials and Energy Fuels are the only viable rare earth pure-plays with sufficient liquidity for systematic wheel execution. MP's integrated mine-to-magnet model and government partnerships provide the most defensible business model, justifying core holding status. UUUU's dual-commodity exposure and lower capital requirements make it an ideal satellite position for enhanced yield.

Together, they offer balance: MP for stability and strategic moat, UUUU for premium generation and diversification. The wheel strategy turns rare-earth volatility, often a deterrent, into a monetizable asset. Selling puts during selloffs and calls during rallies lets you harvest both directional moves and time decay. With 3-5% monthly premiums achievable in current IV conditions, annualized returns of 36-60% are plausible if stocks trade sideways, which beats buy-and-hold by a wide margin.

The critical caveat: Both stocks are speculative, pre-profit investments that bet on the future execution of complex industrial processes. The wheel strategy doesn't eliminate fundamental risk it generates income while waiting for the thesis to materialize. You must be prepared for 30-50% drawdowns if rare-earth prices collapse or China decides to flood the market. Position sizing discipline and diversification beyond rare earths remain essential.

For investors with conviction in U.S. supply chain independence and the patience to harvest volatility over 3-5 years, MP and UUUU represent the rare earth wheel strategy's strongest risk-adjusted opportunities in February 2026.

Just remember: you're not investing in rare earths because they're boring and predictable. You're here because geopolitical risk got weaponized, and somebody has to supply the magnets. Might as well collect rent while we wait to see if that works out.