RTX Plunges 3.73% Intraday, Can It Weather the Tariff Storm?

Summary
• RTX reports Q2 earnings above estimates but shares plummet on revised 2025 profit guidance
• Tariff costs surge as steel/steel tariffs double to 50%, China tariffs cut significantly
• Pratt & Whitney celebrates 100th anniversary with 12% sales growth in Q2
• RTX shares trade between $143.56 and $146.48 as sector leader Lockheed Martin drops 7.03%

Raytheon Technologies is under immediate pressure as a perfect storm of geopolitical tariffs and internal production challenges collide. Despite stellar defense sales growth and a centennial celebration for its iconic Pratt & Whitney division, the stock has slumped to 3% territory. With the 52-week high of $153.39 now distant, investors are grappling with a critical question: is this a buying opportunity or a warning shot from Washington's trade policies?

Tariff Doubling and Production Woes Spur Sell-Off
RTX's dramatic intraday decline stems from a dual shockwave: the Trump administration's doubling of steel and aluminum tariffs to 50%, and ongoing production bottlenecks in its Pratt & Whitney division. The company slashed its 2025 profit forecast from $6.00-$6.15 to $5.80-$5.95 per share, citing $850 million in trade war costs. While defense sales rose 8% to $7 billion and Pratt's engine business saw 12% growth, the tariff shock has exposed supply chain vulnerabilities. With global reciprocal tariffs at 10% and China tariffs reduced, the new 50% rate creates an asymmetric cost burden that's triggering defensive selling.

Aerospace & Defense Sector in Turmoil as LMT Tumbles
The broader aerospace sector is reeling as defense contractor Lockheed Martin (LMT) drops 7.03% on news of Q2 pretax losses. This synchronized decline highlights the sector's vulnerability to both geopolitical risk and production challenges. While RTX's defense segment remains robust (up 8% to $7 billion), the commercial aerospace portion faces headwinds from tariff-driven supply chain disruptions. The sector's technical picture is mixed: 30-day moving average at $145.48 suggests short-term support, but the 200-day average at $128.34 indicates long-term bearish pressure.

Options Playbook: Capitalizing on Volatility with Gamma-Driven Contracts
• 30D MA: $145.48 (above) • 200D MA: $128.34 (below) • RSI: 72.30 (overbought) • MACD: 2.85 (bullish) • Bollinger Bands: 140.32-152.67

RTX is trading near its 30-day moving average at $145.48, with RSI signaling overbought conditions and MACD showing bullish momentum. The Bollinger Bands indicate a 12.35-point volatility range. Two options contracts stand out for their gamma sensitivity and liquidity: RTX20250725C146 and RTX20250725C147. These contracts offer asymmetric exposure to potential price swings while managing time decay risks.

• RTX20250725C146: Call option with 0.100037 gamma (high sensitivity), 0.636010 delta (moderate directional bias), and 20,477 turnover (high liquidity). Implied volatility at 24.35% suggests market pricing in moderate uncertainty. Theta at -0.784690 indicates aggressive time decay, suitable for near-term directional plays.
• RTX20250725C147: Call option with 0.100302 gamma (high sensitivity), 0.530777 delta (moderate directional bias), and 12,208 turnover (strong liquidity). Implied volatility at 25.73% reflects slightly higher uncertainty pricing. Theta at -0.706354 shows significant time decay, ideal for short-term volatility plays.

Payoff analysis under 5% downside scenario (targeting $138.61): RTX20250725C146 would yield max profit of $7.39 per contract, while RTX20250725C147 would deliver $12.39 per contract. These options offer compelling leverage (66.91% and 86.09% respectively) for traders positioning against a potential bounce. With the stock approaching its 146.49 resistance level, consider using the 146 strike as a volatility gauge while monitoring the 145.82 support zone.

Backtest RTX Stock Performance
The backtest of RTX's performance after an intraday plunge of -4% shows favorable short-to-medium-term gains. The 3-Day win rate is 57.39%, the 10-Day win rate is 59.97%, and the 30-Day win rate is 64.95%, indicating a higher probability of positive returns in the immediate aftermath of such events. The maximum return during the backtest period was 5.68%, which occurred on day 59, suggesting that RTX can generate decent gains even after a significant intraday decline.

Act Now: Position for Gamma-Driven Volatility or Defensive Retrenchment
RTX faces an inflection point as tariff pressures and production bottlenecks collide with strong defense demand. While the 30-day moving average at $145.48 offers near-term support, the 200-day average at $128.34 suggests long-term bearish pressure. The sector's turmoil is underscored by Lockheed Martin's 7.03% drop, highlighting systemic vulnerabilities. Traders should prioritize the RTX20250725C146 and RTX20250725C147 options for their gamma sensitivity and liquidity. With RSI in overbought territory and MACD showing bullish momentum, watch for a decisive break above $146.49 or a breakdown below $145.82. Conservative investors may consider hedging with the RTX20250725P140 put option as a defensive measure.