Howmet Aerospace (HWM) Surges 2.67%: Behind the Record Earnings and Volatile Options Action

Summary
• Howmet Aerospace (HWM) reports record $2.05 billion Q2 revenue and 36% EPS growth
• Intraday price jumps from $174.05 to $185.86 amid sector outperformance
• Morgan Stanley raises price target to $210, Jefferies to $220 on supply chain tailwinds
• Options chain sees $182.5–$185 call options dominate with 106%–109% price change ratios

Howmet Aerospace’s stock is surging on a record-breaking earnings report, with the aerospace giant outperforming sector peers despite a weak Forged Wheels segment. The stock’s 2.67% intraday rally—pushing it to $184.57—has triggered a frenzy in the options market as investors position for a potential post-earnings rally. With the stock trading near its 52-week high of $193.26 and analysts upgrading price targets, the question now is whether this momentum can sustain against looming supply chain risks and sector volatility.

Q2 Earnings Triumph Overshadows Segment Woes
Howmet’s record $2.05 billion Q2 revenue and 36% EPS growth have propelled its stock, despite a 4% decline in its Forged Wheels segment. The company’s 9% year-over-year revenue growth—driven by 21% defense aerospace and 17% industrial market gains—has outpaced Wall Street’s expectations. Analysts highlight that while the Forged Wheels weakness caused short-term volatility, the broader aerospace demand for jet production and defense contracts has cemented Howmet’s position as a key player. Morgan Stanley and Jefferies’ upgraded price targets ($210 and $220) reflect confidence in the company’s ability to offset segment underperformance with its high-margin engine products and fastening systems.

Aerospace & Defense Sector Mixed as Howmet Outperforms Boeing
While Howmet Aerospace’s stock surges, Boeing (BA) trades lower by 0.65% amid lingering production delays and regulatory scrutiny. The aerospace sector is broadly optimistic due to increased jet production and defense spending, but Howmet’s niche in high-margin fasteners and engine components has allowed it to outperform. Boeing’s struggles with 737 MAX production and supply chain bottlenecks contrast sharply with Howmet’s diversified revenue streams. Analysts note that Howmet’s 23.2% operating margin and 16.64% net margin—among the highest in the sector—position it to capitalize on aerospace tailwinds more effectively than its peers.

Options Playbook: Leveraged Calls and IV Expansion Opportunities
• 200-day MA: $136.997 (well below current price)
• 30-day MA: $182.27 (bullish crossover)
• RSI: 50.1 (neutral but trending upward)
• MACD: 3.20 (bullish divergence from signal line at 3.91)
• Bollinger Bands: Price at $184.57, near upper band of $193.26

Howmet’s technicals suggest a continuation of its post-earnings rally, with the 200-day MA acting as a strong support. The stock’s 60.4 P/E ratio and 10.08 P/S ratio indicate premium valuations, but robust earnings growth and analyst upgrades justify the premium. For options, two contracts stand out:

• HWM20250808C182.5
- Type: Call
- Strike: $182.5
- Expiry: 2025-08-08
- IV: 34.25% (moderate)
- Leverage Ratio: 38.79%
- Delta: 0.591958 (moderate sensitivity)
- Theta: -0.769172 (high time decay)
- Gamma: 0.041557 (high sensitivity to price moves)
- Turnover: $54,124
- Payoff (5% upside): $10.34 per share (11.5% gain on contract)
- This call offers a balanced risk-reward profile, with high gamma ensuring rapid value growth if the stock breaks above $185.

• HWM20250808C185
- Type: Call
- Strike: $185
- Expiry: 2025-08-08
- IV: 31.36% (moderate)
- Leverage Ratio: 58.68%
- Delta: 0.482659 (moderate sensitivity)
- Theta: -0.659396 (high time decay)
- Gamma: 0.046585 (high sensitivity)
- Turnover: $28,689
- Payoff (5% upside): $7.24 per share (12.4% gain on contract)
- This contract’s lower delta and higher leverage make it ideal for a breakout scenario, with IV expansion amplifying returns if the stock closes above $185.

Aggressive bulls should consider HWM20250808C182.5 into a break above $185, while HWM20250808C185 offers leveraged exposure if the stock holds above its 50-day MA of $177.62.

Backtest Howmet Aerospace Stock Performance
The backtest of HWM's performance after an intraday increase of 3% shows favorable results, with the 3-Day win rate at 57.21%, the 10-Day win rate at 62.91%, and the 30-Day win rate at 73.12%. The maximum return observed was 12.76% over 30 days, indicating that such a surge can lead to significant short-to-medium-term gains.

Howmet’s Rally Faces Crucial Juncture: Buy the Dip or Lock in Profits?
Howmet’s 2.67% surge reflects strong earnings momentum but remains vulnerable to sector volatility and Forged Wheels underperformance. The stock’s 50.1 RSI and 3.2 MACD suggest a neutral-to-bullish bias, with key support at $179.43 (30D support) and resistance at $193.26 (52W high). Investors should monitor the 200-day MA at $136.99 as a critical floor. Meanwhile, Boeing’s -0.65% intraday drop highlights sector fragility, making Howmet’s high-margin business model a compelling long-term play. For immediate action, consider HWM20250808C182.5 for leveraged exposure or a trailing stop-loss to secure gains as the stock approaches its 52W high.