Since being published on July 20, 2022, LMT has had a rise of 10%, and we do not recommend trading on a 10% higher move!

Lockheed Martin and its peers in the defense space caught a bid (meaning they traded higher) after the Russian invasion of Ukraine. LMT reported earnings on Tuesday July 19, 2022 and well lets skip over the earnings report to something more exciting.

On a quantitative basis LMT is trading 2 standard deviations below our price clustering model. Given a distribution of price data of LMT since 3/1/2022 it is making a new relative low on its distribution of closing prices.

Analysis: LMT’s stock is near a buy zone, and is currently poised to endure some volatility, but we think $420 or even higher is in the cards. Our strategy would be to go long a straddle near $395 strike calls and puts, as the volatility should lead to some higher options prices.

Another tailwind in LMT’s stock price is the government awarding a $30 billion spending bill to defense companies, including Lockheed Martin, Raytheon, and Northrop Grumman.

Inflation typically does not matter to defense companies because unfortunately it is taxpayer money that pays for the contracts. Government(s) do not typically care about inflation when it comes to defense spending.