AVAV Plunges 5.89% Amid Sector Turbulence: What's Fueling the Selloff?

Summary
• Aerovironment (AVAV) slumps to $224.2, down 5.89% from $238.23 close
• Intraday swing spans $221.05–$238.14, signaling sharp volatility
• Sector peers like Lockheed Martin (LMT) rally 1.57%, contrasting AVAV's drop

Today’s market action for AVAV reflects a dramatic reversal from its 52-week high of $295.9, with the stock now trading near its 200-day moving average of $184.96. The selloff coincides with a surge in aerospace innovation news—from eVTOL taxi trials to Starlink expansions—yet AVAV’s technicals and options activity suggest a bearish pivot. Traders are now parsing whether this is a short-term correction or a deeper re-rating of the stock’s valuation.

Bearish Kline Pattern and Deteriorating Technicals Trigger AVAV's Sharp Decline
AVAV’s 5.89% drop is driven by a short-term bearish trend confirmed by the Kline pattern, which includes a bearish engulfing candlestick. The stock’s RSI of 33.72 (oversold territory) and MACD of -3.05 (below signal line of -2.34) indicate deteriorating momentum. The Bollinger Bands show AVAV trading near the lower band at $229.51, amplifying bearish pressure. High turnover (939,677 shares) and a 2.52% turnover rate suggest aggressive shorting or profit-taking from recent gains. The lack of bullish catalysts in the company’s news feed further exacerbates the sell-off.

Aerospace & Defense Sector Splits as LMT Rises Amid AVAV's Slide
While AVAV tumbles, the Aerospace & Defense sector shows mixed signals. Sector leader Lockheed Martin (LMT) gains 1.57%, buoyed by its F135 engine contract. This divergence highlights AVAV’s unique vulnerability, possibly due to its niche focus on drones and eVTOLs versus LMT’s diversified defense contracts. The sector’s broader context—spurred by Starlink launches and eVTOL advancements—fails to offset AVAV’s technical breakdown.

High-Volatility Options Playbook: AVAV20250912P220 and AVAV20250912P232.5 Lead the Charge
• 200-day average: $184.96 (below current price)
• RSI: 33.72 (oversold)
• MACD: -3.05 (bearish)
• Bollinger Bands: $229.51 (lower band)

AVAV’s technicals suggest a short-term bearish bias, with key support at $229.51 and resistance at $245.44. The options chain reveals two high-conviction plays: AVAV20250912P220 and AVAV20250912P232.5.

AVAV20250912P220
• Code: AVAV20250912P220
• Type: Put
• Strike: $220
• Expiry: 2025-09-12
• IV: 100.41% (extreme volatility)
• Delta: -0.4116 (moderate sensitivity)
• Theta: -0.2781 (rapid time decay)
• Gamma: 0.01098 (moderate sensitivity to price swings)
• Turnover: $10,250

This put option offers a 19.42% leverage ratio and 80.94% price change ratio, ideal for a 5% downside scenario. A 5% drop to $213.00 would yield a payoff of $7.00 per contract, with IV amplifying potential gains.

AVAV20250912P232.5
• Code: AVAV20250912P232.5
• Type: Put
• Strike: $232.5
• Expiry: 2025-09-12
• IV: 101.32% (extreme volatility)
• Delta: -0.5495 (high sensitivity)
• Theta: -0.1206 (moderate time decay)
• Gamma: 0.01107 (strong sensitivity to price swings)
• Turnover: $73,801

This put offers a 12.15% leverage ratio and 63.72% price change ratio. A 5% drop to $213.00 would generate a $19.50 payoff per contract, leveraging high IV and delta for aggressive bearish exposure.

Aggressive bears should prioritize AVAV20250912P220 for liquidity and AVAV20250912P232.5 for directional bias. If AVAV breaks below $229.51, these puts could outperform.

Backtest Aerovironment Stock Performance

AVAV at Crossroads: Short-Term Volatility and Strategic Options Playbook
AVAV’s sharp decline reflects a technical breakdown and bearish sentiment, but the stock remains above its 200-day average, suggesting potential for a rebound. Traders should monitor the $229.51 support level and the sector leader LMT’s 1.57% gain for broader aerospace cues. The options chain’s high IV and liquidity make AVAV20250912P220 and AVAV20250912P232.5 compelling for short-term bearish plays. Watch for a breakdown below $229.51 or a reversal above $245.44 to dictate next steps.