Howmet Aerospace Plummets 2.9% Amid Pentagon AUKUS Review and Geopolitical Jitters: What’s Next for HWM?

Summary
• Howmet Aerospace (HWM) trades at $170.90, down 2.895% from its $175.99 previous close
• Intraday range spans $170.34 to $176.00, reflecting sharp volatility
• Options chain shows heightened activity in August 22nd $172.5 and $175 calls
• Pentagon’s AUKUS review and global defense sector shifts dominate headlines

Howmet Aerospace’s sharp intraday decline has captured market attention as the stock trades nearly 3% below its previous close. The move coincides with the Pentagon’s announced review of the AUKUS security pact, sparking concerns over U.S. shipbuilding capabilities. With the stock testing its 200-day moving average and options volatility surging, investors are recalibrating positions ahead of key technical levels and sector dynamics.

Pentagon AUKUS Review Sparks Sector Uncertainty
The Pentagon’s decision to review the AUKUS agreement has triggered a wave of uncertainty in the aerospace defense sector. This move, coupled with reports of Chinese military activity near Alaska and geopolitical tensions in the South China Sea, has amplified risk-off sentiment. Howmet Aerospace, a key player in defense manufacturing, faces potential headwinds as investors anticipate delays in defense contracts tied to U.S. shipbuilding and Indo-Pacific security initiatives. The stock’s intraday low of $170.84 suggests immediate selling pressure, with the 52-week low at $90.71 still a distant but psychological anchor.

Aerospace & Defense Sector Mixed Amid Geopolitical Volatility
The Aerospace & Defense sector remains fragmented as geopolitical tensions collide with corporate earnings. Boeing (BA), the sector’s bellwether, has bucked the trend with a 0.76% intraday gain, highlighting divergent investor sentiment. While Howmet Aerospace’s decline reflects sector-wide jitters over defense spending delays, Boeing’s resilience underscores confidence in its commercial and defense segments. This divergence signals a potential rotation within the sector, with investors favoring firms with diversified revenue streams over those reliant on government contracts.

Options and ETFs for Navigating HWM’s Volatility
• 200-day average: $140.81 (well below current price)
• RSI: 32.18 (oversold territory)
• MACD: -0.63 (bearish divergence)
• Bollinger Bands: $174.39 (lower band) vs. $170.84 (intraday low)

Technical indicators suggest HWM is testing critical support levels, with the 200-day moving average acting as a long-term floor. The RSI’s oversold reading hints at potential short-term bounce, but the bearish MACD and Bollinger Band compression indicate caution. For options traders, the HWM20250822C172.5 and HWM20250822C175 contracts stand out. The HWM20250822C172.5 call (strike $172.5, 2025-08-22) offers a 69.94% leverage ratio and 28.78% implied volatility, with a delta of 0.454 and theta of -0.563. Its high gamma (0.054) ensures sensitivity to price swings, while the $12,212 turnover confirms liquidity. A 5% downside scenario (to $162.44) would yield a $9.96 payoff, making it a high-reward bet for short-term volatility. The HWM20250822C175 call (strike $175, 2025-08-22) boasts a 114.23% leverage ratio and 28.57% IV, with a delta of 0.324 and theta of -0.437. Its $11,471 turnover and 0.0496 gamma position it as a safer play for a potential rebound above $175. Aggressive bulls may consider HWM20250822C175 into a break above $175, while cautious bears could hedge with HWM20250822P160 for downside protection.

Backtest Howmet Aerospace Stock Performance
The 3-Day win rate for HWM after an intraday percentage change of less than -3% is 62.50%, with an average return of 1.16% over that period. The 10-Day win rate is higher at 68.10%, with an average return of 2.88%. Over a 30-Day period, the win rate is 73.32%, with an average return of 7.05%. The maximum return during the backtest was 13.01%, which occurred on day 59 after the intraday plunge.

Act Now: HWM at Pivotal Technical and Sector Crossroads
Howmet Aerospace’s sharp decline has positioned it at a critical juncture, with technical indicators and sector dynamics converging. The stock’s proximity to its 200-day moving average and oversold RSI suggest a potential rebound, but the bearish MACD and geopolitical headwinds caution against complacency. Investors should monitor the $174.39 Bollinger Band and $183.29 30-day moving average as key resistance levels. Meanwhile, Boeing’s 0.76% gain highlights sector resilience, offering a benchmark for HWM’s potential recovery. For immediate action, consider HWM20250822C172.5 for volatility plays or HWM20250822P160 for downside hedging. Watch for a break above $175 or a breakdown below $170.84 to confirm the next directional move.