Defense Stock Could See Prolonged Tailwinds

The stock is already up nearly 22% this year

Digital Content Manager
May 21, 2024 at 1:44 PM
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Kratos Defense & Security Solutions Inc (NASDAQ:KTOS) stock was last seen up 0.5% at $21.76, pacing for a third-straight daily gain after earlier surging to a fresh two-year high of $22.03. The shares already boast a 54.9% year-over-year lead, and now a historically bullish signal points to prolonged tailwinds ahead.

KTOS Intraday

Today's peak comes amid historically low implied volatility (IV), which has been a bullish combination for the stock in the past. Per Schaeffer's Senior Quantitative Analyst Rocky White, there were four times in the past five years when the security was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower. This is the case with KTOS' SVI of 31%, which sits in the low 1st percentile of its 12-month range.

White's data shows that just one month after these signals, Kratos Defense & Security Solutions stock was higher, averaging a 6.8% pop for that time period. From its current perch, a move of similar magnitude would put the equity above the $23 region for the first time since February 2021.

Options bulls are firmly in control. Over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the security's 50-day call/put volume ratio of 18.33 stands higher than 70% of readings from the past 12 months.

 

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