Allegion Soared 6.2%, What’s Fueling This Record Surge?

Summary
• Allegion (ALLE) surged 6.2% to $163.935, hitting a 52-week high of $163.99
• Q2 2025 EPS of $2.04 beat estimates of $1.99, with revenue of $1.02B up 5.8% YoY
• CEO John H. Stone highlighted 'strong organic growth in Americas non-residential business'
• Options activity spiked, with 20 contracts traded as bulls position for further gains
Allegion’s stock is in a tailwind as investors react to its record-breaking Q2 results and upgraded full-year guidance. The stock’s intraday range from $156 to $164 reflects aggressive buying, driven by outperforming earnings and strategic margin improvements. With a 22.9x P/E and a 1.56% turnover rate, the market is now testing key technical levels.

Earnings Surge and Full-Year Guidance Ignite Rally
Allegion’s 6.2% intraday surge was fueled by its Q2 2025 earnings report, which exceeded Wall Street’s expectations on both revenue and profit lines. The company reported $1.02 billion in revenue (up 5.8% YoY) and $2.04 in adjusted EPS (up 4.1% YoY), while raising its full-year revenue guidance to 6.5%-7.5% growth and EPS to $8.00-$8.15. CEO John H. Stone emphasized 'agility in navigating dynamic environments,' with Americas non-residential business driving 6.6% organic revenue growth. The upgraded guidance and margin resilience in the face of inflationary pressures created a catalyst for short-term bulls.

Options Playbook: Leveraged Calls and Gamma-Driven Plays
• 200-day average: 136.99 (below) • RSI: 62.23 (neutral) • MACD: 2.88 (bullish) • K-line pattern: Short-term bullish trend
Allegion’s technicals suggest a continuation of its rally, with key support at $148.39 (30D MA) and resistance at $155.26 (Bollinger Upper). The 62.23 RSI indicates balanced momentum, while the 2.88 MACD histogram signals bullish divergence. For traders, the 2025-08-15 160C call (delta: 0.74) and 165C call (delta: 0.48) stand out due to their gamma and leverage profiles.
• ALLE20250815C160: Strike $160, Expiry 08/15, IV 15.16%, Leverage 33.72%, Delta 0.74, Theta -0.1987, Gamma 0.0519, Turnover 1,783
• ALLE20250815C165: Strike $165, Expiry 08/15, IV 28.88%, Leverage 38.94%, Delta 0.48, Theta -0.2001, Gamma 0.0336, Turnover 888
The 160C offers high delta exposure for a 5% upside scenario (targeting $172.13), with theta decay (-0.1987) favoring near-term action. The 165C, with moderate delta and high gamma (0.0336), benefits from price acceleration. At current levels, 160C yields a 125.58% price change potential, while 165C offers 48.94%. Aggressive bulls should target a $165 close to trigger gamma-driven momentum.

Backtest Allegion Public Stock Performance
The backtest of Allegheny Energy's (ALLE) performance after a 6% intraday surge shows mixed results. While the stock experienced a positive maximum return of 2.48% on the day following the surge, the overall short-term performance was lackluster, with the 3-day and 10-day return rates being negative at -0.04% and 0.07%, respectively. The 30-day return rate was slightly positive at 0.88%, but the win rates for all three time frames were below 50%, indicating that the surge was not consistently followed by further gains.

Now’s the Time to Act: Position for $165 Breakout or Gamma-Driven Moves
Allegion’s rally is underpinned by earnings strength and upgraded guidance, with technicals and options data pointing to a high-probability continuation. Watch for a breakout above $165 to confirm bullish momentum, as the 160C and 165C options are primed for a 5%-10% upside. Meanwhile, sector leader Stanley Black & Decker (SWK) fell 2.1% as earnings season enters its peak. Traders should prioritize the 160C for near-term gains and the 165C for a gamma-driven move if volatility expands. For a conservative approach, target a $165 close as a trigger for further upside.