AeroVironment Soars 7.68% on Military Innovation and Trump Budget Hype

Summary
• AeroVironment (AVAV) surges 7.16% after delivering laser weapon systems to the U.S. Army.
• President Trump’s 2027 military budget proposal boosts after-hours trading by 6%.
• Partnership with Parry Labs to advance drone systems reinforces investor confidence.

AeroVironment’s stock (AVAV) is trading at $407.665, up 7.68% intraday, with a range from $381.0 to $408.25. The surge is driven by military contract wins, strategic partnerships, and Trump’s budget announcement, signaling robust short-term momentum.

Military Laser Delivery and Trump Budget Fuel AVAV Surge
AeroVironment’s stock surged on the delivery of mobile laser weapon systems to the U.S. Army, a critical milestone in its defense prototyping efforts. The announcement aligned with President Trump’s proposed 2027 military budget increase, which directly benefits defense contractors. Additionally, a partnership with Parry Labs to enhance drone systems underscored AVAV’s technological edge, while KeyBanc’s Overweight rating highlighted its competitive positioning in the defense sector. These catalysts collectively drove aggressive buying, particularly in after-hours trading.

Defense Sector Gains Momentum as AVAV Leads Innovation
The defense sector is rallying on Trump’s budget proposal and global military modernization trends. AVAV’s focus on laser weapons and drone systems positions it ahead of peers like Lockheed Martin (LMT), which rose 0.58% intraday. AVAV’s 7.68% gain outpaces sector averages, reflecting its niche in cutting-edge defense tech and strong government contract visibility.

Options and ETFs to Capitalize on AVAV’s Bullish Momentum
• 200-day average: 252.83 (below current price)
• RSI: 83.56 (overbought)
• MACD: 27.70 (bullish divergence)
• Bollinger Bands: 404.71 (upper), 181.69 (lower)

AVAV’s technicals suggest a continuation of its upward trend, with key resistance at $417.86 (52W high) and support at $381.0 (intraday low). The RSI’s overbought level and MACD’s positive divergence indicate strong short-term momentum. For leveraged exposure, consider XSD (defense ETF) if data were available, but focus on options given AVAV’s liquidity and volatility.

Top Options Contracts:
• AVAV20260123C410: Call option with strike $410, expiring 2026-01-23. Key stats: IV 58.35%, leverage ratio 32.39%, delta 0.481862, theta -1.830190, gamma 0.011350, turnover 303,981. This contract offers high leverage and moderate delta, ideal for capitalizing on a 5% upside (target $428.05).
• AVAV20260123C425: Call option with strike $425, expiring 2026-01-23. Key stats: IV 58.56%, leverage ratio 57.33%, delta 0.322956, theta -1.438061, gamma 0.010186, turnover 61,565. High leverage and strong gamma make it suitable for aggressive bulls expecting a breakout above $425.

Payoff Estimation: A 5% upside to $428.05 would yield $18.05 per share for AVAV20260123C410 and $3.05 for AVAV20260123C425. The former’s high leverage ratio (32.39%) amplifies returns, while the latter’s moderate delta (0.32) balances risk. Aggressive bulls should prioritize AVAV20260123C410 for a near-term breakout play.

Backtest Aerovironment Stock Performance
The backtest of AVAV's performance following an 8% intraday increase from 2022 to the present shows favorable results. The 3-Day win rate is 51.22%, the 10-Day win rate is 57.55%, and the 30-Day win rate is 59.18%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest was 9.59% over 30 days, suggesting that AVAV can experience significant gains even after the initial 8% surge.

Bullish Momentum Unlikely to Subside—Act on Key Levels
AeroVironment’s surge is underpinned by military innovation, Trump’s budget, and strategic partnerships, making a near-term pullback unlikely. Traders should monitor the $417.86 52W high as a critical resistance level and the $381.0 intraday low for support. With Lockheed Martin (LMT) up 0.58%, the defense sector’s macro backdrop remains favorable. Act now: Buy AVAV20260123C410 for a 5% upside target or hold AVAV20260123C425 for a breakout above $425. Watch for a breakdown below $381.0 to signal a reversal.