Howmet Aerospace Plunges 10.14%—What’s Behind the Sudden Freefall?

Summary
• Current price: $172.65, down 10.14% from $192.14
• Intraday range: $171.78 to $190.0
• Q2 revenue up 9% YoY, record $407M net income, $175M share repurchases
• Sector leader Boeing (BA) down 1.76%

Howmet Aerospace’s stock is in freefall after a record Q2 performance and aggressive share buybacks. Despite raising 2025 guidance and reporting a 9% revenue surge, the stock opened at $190 and has since cratered to $172.65. The aerospace sector is in turmoil, with Boeing also underperforming. What’s triggering this sharp reversal after a strong earnings report?

Sharp Correction After Strong Q2 Earnings and Share Repurchases
Howmet’s 10.14% drop is a textbook overreaction to a short-term overbought condition. The stock surged 9% post-earnings, breaching the 52-week high of $193.26, but failed to sustain momentum. Technical indicators like RSI (71.7) and the 30D MA ($182.01) suggest overbought exhaustion. While the company raised guidance and deployed $175M in buybacks, short-term traders likely profit-taken after a 10%+ pop. The move isn’t tied to negative news—just a classic reversal after a rapid rally.

Aerospace & Defense Sector Mixed as Howmet Dives, Boeing Slides
The Aerospace & Defense sector is under pressure, with Boeing down 1.76% on worries over commercial aviation demand. Howmet’s drop, however, is more pronounced, suggesting stock-specific factors like technical exhaustion. Sector-wide, defense contractors are mixed as markets digest mixed signals on military spending. Howmet’s sharp move reflects broader sector jitters amplified by its own overbought condition.

Options Playbook: Capitalizing on Volatility and Key Levels
• 30D MA: $182.01 (below current price)
• 200D MA: $136.61 (far below)
• RSI: 71.7 (overbought)
• MACD: 4.10 (bullish divergence)
• Bollinger Bands: 175.54–193.69 (current price near lower band)

Key levels to watch include the 30D MA ($182) and 52-week low ($85.39). A break below $175.54 (lower Bollinger band) could trigger further selling. Aggressive traders may consider short-term puts or short positions if the stock fails to rebound above $185.

Top Option 1: HWM20250808C175
• Type: Call
• Strike: $175
• Expiration: 2025-08-08
• IV: 20.78% (moderate)
• Leverage ratio: 68.24% (high)
• Delta: 0.5455 (moderate sensitivity)
• Theta: -0.5591 (rapid time decay)
• Gamma: 0.0693 (responsive to price moves)
• Turnover: 11,117 (high liquidity)
This call offers high leverage and liquidity, ideal for a short-term rebound trade if the stock bounces above $180. A 5% downside scenario (to $164) would see the call expire worthless, but it’s a high-risk, high-reward play.

Top Option 2: HWM20250808C177.5
• Type: Call
• Strike: $177.5
• Expiration: 2025-08-08
• IV: 30.60% (reasonable)
• Leverage ratio: 70.15% (high)
• Delta: 0.4189 (moderate sensitivity)
• Theta: -0.5130 (rapid decay)
• Gamma: 0.0464 (moderate responsiveness)
• Turnover: 91,821 (extremely liquid)
This option balances leverage and liquidity. A 5% downside (to $164) would also see the call expire, but it’s a better bet for a short-term rebound due to higher IV and liquidity.

If $180 breaks, consider HWM20250808C175 for a bounce play. Aggressive bears may short HWM20250808C177.5 if the stock closes below $175.

Backtest Howmet Aerospace Stock Performance
The Backtest of HWM's performance after a -10% intraday plunge shows favorable results. The 3-Day win rate is 61.85%, the 10-Day win rate is 68.40%, and the 30-Day win rate is 73.99%. Additionally, the maximum return during the backtest period was 13.20%, which occurred on day 59, indicating that HWM has a strong tendency to recover from significant intraday declines.

Act Now: Position for Volatility or Cash in on Corrections
Howmet’s sharp correction reflects overbought exhaustion, not fundamental weakness. The stock remains above key moving averages and 52-week lows, but liquidity and technical levels will dictate near-term direction. Watch the 30D MA ($182) and 52-week low ($85.39) as critical thresholds. Sector leader Boeing’s 1.76% drop adds macro context. Investors should consider short-term options for volatility plays or cash in if the stock breaks below $175. Position accordingly—this is a high-volatility environment demanding agility.