Call Traders Target Defense Stock After Earnings Win

RTX is trading at its highest level since a late-July post-earnings bear gap

Deputy Editor
Jan 23, 2024 at 10:48 AM
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The shares of RTX Corp (NYSE:RTX) are leading the S&P 500 Index (SPX) today, up 7.5% at $91.41 at last glance. The stock is on track for their best single-session gain since November 2020, after the defense contractor's better-than-expected fourth-quarter results, helped by aviation strength and defense demand globally. RTX is capitalizing on the shortage of new jets amid the uptick in travel. 

Today's pop has RTX stock breaking above the $87 level, which coincides with its 200-day moving average and provided a firm ceiling of pressure since the start of 2024. The shares are now trading at their highest level since a July 25 post-earnings bear gap of 10.2%. Since last January, the stock is currently down 4.5%. 

Options bulls were quick to get in on the action this morning. So far, 58,000 calls have been exchanged in comparison o 13,000 puts, with overall options volume already at 2.2 times the average daily volume. The weekly 1/26 93-strike call is the most popular contract, followed by the 95-strike call in the same series, with new positions opening at both. 

Analysts have yet to chime in today, though there is plenty of room for optimism. Of the 18 analysts in coverage, 13 carry a "hold" or worse rating on RTX, while the 12-month consensus price target of $89.48 now sits at a small discount to current levels. A round of overdue bull notes could help RTX finally fill that late July bear gap. 

 

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