AVAV Plunges 6.35%: Can Defense Wins Offset Market Jitters?

Summary
• Aerovironment (AVAV) slumps to $353.205, down 6.35% from its $377.18 close
• $95.9M U.S. Army contract and Korean Air partnership fail to buoy shares
• Intraday range of $351.0–$378.29 highlights volatile session
• Options chain surges with 93 contracts for the $345 put expiring October 31

Aerovironment’s stock is in freefall despite a flurry of defense-sector wins, including a $95.9M contract for its Long-Range Kinetic Interceptor (LRKI) program and a strategic partnership with Korean Air. The stock’s 6.35% intraday drop to $353.205—its lowest since October 13—contrasts sharply with its 52-week high of $417.86. With the options market betting heavily on downside risk and technical indicators flashing mixed signals, investors are left to parse whether this selloff is a buying opportunity or a warning shot.

Defense Contracts Fail to Stabilize AVAV Amid Broader Market Anxiety
Despite securing a $95.9M contract for its LRKI program and a software integration role in the U.S. Army’s HMIF system, AVAV’s shares have cratered. The selloff coincides with broader market jitters over interest rate uncertainty and defense-sector profit-taking. Recent analyst optimism—highlighted by a Zacks ‘Strong-Buy’ upgrade and a $292.33 average target price—has clashed with short-term profit-taking, particularly after AVAV’s 160% surge in 2025. The stock’s sharp decline suggests investors are discounting near-term execution risks, such as production delays or margin pressures, despite AVAV’s leadership in loitering munitions and C-UAS technology.

Options and ETFs to Navigate AVAV’s Volatility: A Tactical Playbook
• 200-day MA: $209.19 (well below current price)
• RSI: 58.64 (neutral, but trending lower)
• MACD: 24.73 (bearish crossover with signal line at 30.14)
• Bollinger Bands: $286.55–$439.07 (price near lower band)

AVAV’s technicals paint a mixed picture: a long-term bullish trend coexists with short-term bearish momentum. The stock is testing its 30-day support range of $298.94–$302.30, while the 200-day MA remains a distant floor. For traders, the key levels to watch are $345 (psychological support) and $330 (critical pivot). The options market reflects this tension, with high-liquidity puts dominating the chain.

Top Options Picks
• AVAV20251031P345
- Type: Put
- Strike: $345
- Expiry: 2025-10-31
- IV: 55.60% (high volatility)
- Leverage: 35.82%
- Delta: -0.4023 (moderate sensitivity)
- Theta: -0.0240 (slow time decay)
- Gamma: 0.01197 (responsive to price swings)
- Turnover: 83,145 (liquid)
- Why it stands out: This put offers a balance of leverage and liquidity, ideal for capitalizing on a 5% downside move (projected price: $335.54). Payoff would be $9.46 per contract, or $946 for 100 shares.

• AVAV20251031P340
- Type: Put
- Strike: $340
- Expiry: 2025-10-31
- IV: 56.70% (high volatility)
- Leverage: 43.88%
- Delta: -0.3445 (moderate sensitivity)
- Theta: -0.0934 (rapid time decay)
- Gamma: 0.0112 (responsive to price swings)
- Turnover: 22,966 (liquid)
- Why it stands out: This put’s higher leverage (43.88%) and aggressive theta (-0.0934) make it a high-risk, high-reward play. A 5% drop would yield a $17.66 payoff per contract, or $1,766 for 100 shares. However, its rapid time decay requires swift execution.

Trading Setup: Aggressive short-sellers should prioritize the $345 put for its liquidity and moderate delta. For a more speculative angle, the $340 put offers outsized leverage but demands precise timing. Both contracts align with AVAV’s bearish near-term bias, as signaled by its MACD crossover and RSI pullback.

Backtest Aerovironment Stock Performance
The historical analysis evaluating Aerovironment (AVAV.O) after every intraday draw-down of ≥ 6 % (from the 2022 start date through 2025-10-22) is ready.Key research takeaways (30-day analysis window):• 728 qualifying events were identified.• Average excess return vs. benchmark never reached statistical significance; the cumulative relative performance after 30 trading days is −1.65 ppts (AVAV +5.41 % vs. benchmark +7.06 %).• Win-rate hovers ~56 %; the edge is not economically meaningful.• Mean-reversion is muted: most of the recovery, when it occurs, completes within the first week.Feel free to explore the interactive chart above for full day-by-day details.

AVAV’s Crossroads: Defense Wins vs. Market Realism
Aerovironment’s stock is at a critical inflection point. While its defense contracts and product pipeline (e.g., Switchblade loitering munitions, VAPOR CLE drones) position it as a long-term winner in the U.S. military’s autonomous systems push, today’s selloff reflects near-term skepticism. The options market’s heavy put activity and technical indicators like the bearish MACD suggest a short-term correction is likely. However, AVAV’s 52-week high of $417.86 and robust 52W range (102.25–417.86) indicate the stock remains in a long-term bullish trend. Investors should monitor the $345 support level and the sector leader Lockheed Martin (LMT), which fell -0.83% today. Act now: If $345 breaks, the AVAV20251031P345 put offers a strategic short-side entry.