Bulls Won Big With Defense Stock's Record Highs

Options bulls tripled their investment with our recommendation

Digital Content Manager
May 14, 2024 at 1:54 PM
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Weekend Player subscribers more than tripled their investments with our RTX Corp (NYSE:RTX) August 95 call recommendation. Let's unpack the reasoning behind this winning bet below.

At the time of our recommendation on Sunday, March 17, the equity basted a 23.6% six-month lead, outpacing the S&P 500 Index (SPX). Additionally, we knew from the defense company's fiscal fourth-quarter report that it had $4.7 billion in operating cash flow, $3.9 billion in free cash flow, and a $196 billion backlog. RTX had also repurchased $10.3 billion in shares.

Nevertheless, analysts still leaned bearish, with 15 calling the stock a "hold" or worse, while the remaining five said "buy." The options pits echoed that pessimism, per RTX's Schaeffer's put/call open interest ratio (SOIR) that sat in the 87th percentile of annual readings.

It all hanged after the company surpassed fiscal first-quarter earnings and revenue expectations amid demand for missile defense systems, which earned the stock a few price-target hikes. With support from the 20-day moving average, our traders rode this rally until the previous session, when they closed their positions after RTX nabbed a record high of $107.81. While the stock is flat today, our traders already pocketed a 207% profit.

RTX 20 Day

 

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