L3Harris Surges 3.3% on $200M Rocket Contract and Strategic Expansion

Summary
• L3Harris (LHX) surges 3.3% to $286.595, hitting an intraday high of $287.27
• $200M GMLRS propulsion contract and new Arkansas facility drive optimism
• RSI at 39.3 and MACD near signal line hint at potential consolidation

L3Harris Technologies (LHX) is surging on the back of a $200 million contract to produce Guided Multiple Launch Rocket System (GMLRS) propulsion units, with production shifting to a newly constructed Arkansas facility. The stock’s 3.3% intraday gain reflects investor confidence in the defense giant’s capacity expansion and strategic alignment with U.S. military priorities. With the stock trading near its 52-week high of $308.12, the move underscores the sector’s resilience amid geopolitical tensions and defense spending tailwinds.

Defense Contract and Capacity Expansion Fuel Rally
L3Harris’ 3.3% intraday surge is directly tied to its $200 million GMLRS propulsion contract, which marks the first order processed through its new Arkansas facility. The facility, funded under the Defense Production Act, is expected to boost annual production capacity by 30%, addressing surging demand for military propulsion systems. Management emphasized the contract’s significance in scaling output and reliability, with the new Arkansas plant complemented by Huntsville’s inert component production. This strategic expansion, coupled with the company’s 80% output increase over decades, positions L3Harris to capitalize on Pentagon modernization efforts and international defense contracts.

Defense Sector Rally: L3Harris Outpaces Peers
The defense sector is in a bull phase, with L3Harris outperforming peers like Lockheed Martin (LMT), which rose 0.85% on the same day. The sector’s strength is driven by U.S. military modernization, with L3Harris’ GMLRS contract aligning with broader trends in missile propulsion and space-based systems. While LMT focuses on hypersonic and space programs, L3Harris’ recent $200M award and new Arkansas facility highlight its competitive edge in solid rocket motor production. The stock’s 3.3% gain contrasts with a 1.6% rise in the S&P 500, reflecting defense’s outperformance amid inflationary pressures and global instability.

Options and ETFs for Navigating L3Harris’ Volatility
• 200-day MA: $255.71 (well below current price), RSI: 39.3 (neutral), MACD: -3.08 (near signal line at -3.24)
• Bollinger Bands: Price at $286.595 near upper band ($298.48), suggesting potential overextension
• 30D support/resistance: $277.60–$278.19 (short-term key levels)

L3Harris’ technicals suggest a short-term bullish bias, with the stock trading near its 52-week high and RSI indicating a neutral zone. The 200-day MA is a distant $255.71, underscoring the stock’s strength. For options, two contracts stand out:

• LHX20251219C285 (Call, $285 strike, 12/19 expiry):
- IV: 20.66% (moderate), Leverage Ratio: 61.17%, Delta: 0.567, Theta: -0.5725, Gamma: 0.0401, Turnover: 2,560
- IV suggests reasonable volatility, high leverage amplifies gains if the stock breaks $285, and gamma indicates sensitivity to price moves. A 5% upside to $299.92 would yield a payoff of $14.92 per contract, offering a 104% return on a $14.37 premium.

• LHX20251219C282.5 (Call, $282.5 strike, 12/19 expiry):
- IV: 20.57% (moderate), Leverage Ratio: 46.40%, Delta: 0.665, Theta: -0.6207, Gamma: 0.0373, Turnover: 1,443
- Delta near 0.665 offers a balanced risk-reward profile, while theta decay (-0.6207) suggests time erosion is manageable. A 5% move to $299.92 would yield a $17.42 payoff, a 66.76% gain on a $26.15 premium.

Aggressive bulls should consider LHX20251219C285 into a break above $285, while conservative traders may target LHX20251219C282.5 for a safer entry. If $285 holds, the stock could test $298.48 (Bollinger upper band) by year-end.

Backtest L3Harris Stock Performance
The backtest of L3Harris' performance following a 3% intraday surge from 2022 to the present shows a strategy return of 31.43%, with a benchmark return of 44.43% and an excess return of -13.00%. The strategy has a CAGR of 7.23% and a maximum drawdown of 0.00%, indicating a stable but conservative performance during the backtested period.

L3Harris Poised for Short-Term Gains—Act on Key Levels
L3Harris’ 3.3% rally is well-supported by its $200M GMLRS contract and strategic capacity expansion, with technicals pointing to a potential test of the $298.48 upper Bollinger band. The stock’s RSI at 39.3 and MACD near the signal line suggest momentum is intact, but traders should monitor the 200-day MA at $255.71 as a critical support level. With the sector leader Lockheed Martin (LMT) up 0.85%, defense remains a top-performing sector. Investors should watch for a break above $285 to validate the bullish case, while a close below $277.60 could trigger a pullback. For immediate action, target LHX20251219C285 for a 5% upside scenario.