Critical F-35 Trump Tweet Stokes Lockheed Martin Corporation (LMT) Options Trading

Shares of Lockheed Martin Corporation (NYSE:LMT) are trading lower, after a critical tweet from President-elect Donald Trump

Dec 12, 2016 at 11:05 AM
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Aerospace issue Lockheed Martin Corporation (NYSE:LMT) is just the latest stock moving on a tweet from President-elect Donald Trump. Specifically, Trump took to Twitter Inc. (NYSE:TWTR) to say LMT's "F-35 program and cost is out of control" -- echoing last week's critical tweet of Boeing Co's (NYSE:BA) Air Force One program -- sending LMT stock down 3.8% to trade at $249.55. Amid today's pullback, LMT options volume has exploded to five times the average intraday pace -- with 4,545 puts traded at last check, compared to 4,484 calls.

Today's put-skewed trading just echoes the withstanding trend seen among short-term traders in LMT's options pits, per the stock's Schaeffer's put/call open interest ratio (SOIR) of 2.07. Not only does this show that puts more than double calls among options set to expire in three months or less, but it ranks in the elevated 93rd annual percentile.

However, the SOIR measures a stock's total open interest -- and includes contracts that were both bought and sold. According to the major options exchanges, LMT traders have shown a penchant for short puts in recent weeks. Specifically, speculators at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) have sold to open 2.01 puts for each one they've bought over the past 20 sessions.

Outside of the options pits, short interest jumped 35% in the most recent reporting period. Nevertheless, these bearish bets account for just 1% of the LMT's available float -- and the 2.6 million shares sold short are a far cry from the 36.8 million in mid-August. Meanwhile, analysts are mostly upbeat, with the stock seeing seven "strong buy" recommendations, versus four "holds" and not a single "sell."

Looking at the charts, the stock has put in a standout performance in 2016, up almost 15%. Plus, the stock topped out at a record high of $269.90 one week ago. What's more, today's retreat is being contained by Lockheed Martin Corporation's (NYSE:LMT) 80-day moving average -- a trendline that worked as resistance earlier this year, but could now be switching to a more supportive role.

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