Rocket Lab Surges 5.9% on Sector Tailwinds and Options Volatility

Summary
• KeyBanc downgrades RKLB to Sector Weight, citing overvaluation despite $816M contract win
• Needham raises price target to $110, signaling bullish sentiment amid $1.5T SpaceX IPO rumors
• RKLB trades at 42x 2027 sales, outpacing historical SpaceX multiples
• Intraday range of $92.40–$96.69 reflects aggressive short-term positioning

Rocket Lab’s 5.9% rally on Thursday defies its downgrade, fueled by sector-wide optimism around national security spending and speculative options flows. With the stock nearing its 52-week high of $96.69, traders are betting on a mix of near-term catalysts—from Neutron rocket progress to geopolitical-driven defense spending—while technical indicators suggest a continuation of the bullish momentum.

Downgrade Ignited Speculation, Not Deterrence
Rocket Lab’s 5.9% surge defies KeyBanc’s downgrade, which cited overvaluation despite $816M in new contracts and infrastructure progress. The downgrade itself acted as a catalyst for short-term traders, who interpreted the bearish call as a buying opportunity in a stock already trading at 42x 2027 sales. Meanwhile, the $1.5T SpaceX IPO rumor re-rated the entire space sector, with RKLB’s vertical integration and national security focus making it a proxy for broader defense spending optimism. Options data reinforces this narrative: 784,158 shares of the $90 call option traded, reflecting aggressive bullish positioning ahead of the January 23 expiration.

Aerospace Sector Mixed as RKLB Outpaces LMT
While Rocket Lab’s 5.9% rally outpaces Lockheed Martin’s 0.5% gain, the aerospace sector remains fragmented. Defense stocks surged earlier in the week on Trump’s $1.5T military budget proposal, but momentum has since cooled as investors digest mixed signals from European defense spending and U.S. policy uncertainty. RKLB’s unique positioning in national security—coupled with its speculative tech-driven narrative—has allowed it to decouple from the sector’s broader volatility, drawing capital from both institutional and retail traders.

Options Playbook: Leverage Volatility with RKLB20260123C90 and RKLB20260123C91
• MACD: 8.55 (above signal line 7.68), RSI: 67.10 (overbought), Bollinger Bands: 97.31 (upper), 77.33 (middle), 200D MA: 44.69 (far below)
• Key Levels: 96.69 (52W high), 92.40 (intraday low), 77.33 (Bollinger mid)
• Short-Term Outlook: Strong bullish momentum with RSI near overbought and MACD expanding. Aggressive bulls should target 96.69 breakout for a 7% upside.
• Top Options:
• RKLB20260123C90: Call, $90 strike, 1/23 expiry, IV 60.63%, leverage 10.24%, delta 0.82, theta -0.516, gamma 0.0298, turnover 784,158
• IV: High volatility, delta: Strong directional bias, theta: Aggressive time decay, gamma: Responsive to price swings
• This contract offers 68.78% potential payoff if RKLB hits $96.11 (5% upside), with high leverage and liquidity to capitalize on a breakout.
• RKLB20260123C91: Call, $91 strike, 1/23 expiry, IV 73.66%, leverage 12.09%, delta 0.75, theta -0.549, gamma 0.0299, turnover 84,558
• IV: Elevated volatility, delta: Balanced directional exposure, theta: Sharp time decay, gamma: High sensitivity to price moves
• With 74.11% potential payoff on a 5% upside, this contract balances leverage and liquidity for a mid-term rally.
• Action: Aggressive bulls should prioritize RKLB20260123C90 into a 96.69 breakout. If the 52W high holds, consider rolling into RKLB20260123C93 for extended exposure.

Backtest Rocket Lab Stock Performance
The backtest of RKLB's performance following a 6% intraday increase from 2022 to the present shows a significant strategy return of 433.53%, vastly outperforming the benchmark return of 48.07%. The strategy achieved an excess return of 385.46% and a CAGR of 53.47%, indicating substantial growth during the period. However, it came with high volatility, a maximum drawdown of 69.79%, and a Sharpe ratio of 0.65, suggesting a risky but potentially rewarding investment profile.

Hold for Neutron Launch Clarity, Target 96.69 Breakout
Rocket Lab’s rally hinges on two near-term catalysts: a successful Neutron rocket launch (currently delayed to Q1) and clarity on its satellite constellation roadmap. The stock’s technicals and options flows suggest a continuation of the bullish trend, but investors must remain cautious of KeyBanc’s valuation concerns. With the sector leader Lockheed Martin up 0.5%, the aerospace space remains a mixed bag—RKLB’s momentum is justified by its unique national security angle but requires execution on its Neutron timeline to sustain the rally. Watch for a 96.69 breakout or a breakdown below 92.40 to dictate next steps.