L3Harris Surges 3.5% on $200M Rocket Contract and Strategic Expansion – What’s Fueling This Defense Giant’s Rally?

Summary
• L3Harris (LHX) surges 3.5% intraday to $287.09, driven by a $200M GMLRS propulsion contract and new Arkansas facility
• New facility to boost production capacity by 30%, with first order under Defense Production Act funding
• Sector leader Lockheed Martin (LMT) up 0.79%, signaling broader defense sector strength

L3Harris Technologies is riding a wave of momentum as a $200 million contract for Guided Multiple Launch Rocket System (GMLRS) propulsion units and a newly constructed Arkansas facility fuel a 3.5% intraday rally. The stock’s surge to $287.09—up from a $276.38 intraday low—reflects growing confidence in the company’s ability to scale production amid heightened defense spending. With the U.S. Space Force also advancing electromagnetic warfare systems through L3Harris, the stock’s performance underscores its strategic position in the defense industrial base.

Defense Contract and Production Expansion Ignite L3Harris Rally
L3Harris’ 3.5% intraday gain is directly tied to two major catalysts: a $200 million GMLRS propulsion contract and the operationalization of its new Arkansas facility. The contract, the largest GMLRS IM award from Lockheed Martin in a 12-month period, leverages L3Harris’ decades-long expertise in missile propulsion. The new 60,000-square-foot facility in Camden, Arkansas—funded under the Defense Production Act—will increase annual production capacity by over 30%, enabling faster delivery of propulsion units. This expansion aligns with the Pentagon’s push for domestic manufacturing resilience, while the company’s 80% output increase over the past decade highlights its operational efficiency. Additionally, the recent completion of the Meadowlands electromagnetic warfare system’s international review for the U.S. Space Force reinforces L3Harris’ role in next-generation defense technologies.

Defense Sector Gains Momentum as L3Harris Leads with Strategic Wins
The defense sector is experiencing a tailwind as geopolitical tensions and modernization programs drive demand. L3Harris’ rally mirrors broader industry trends, with peers like Lockheed Martin (up 0.79%) and Northrop Grumman (up 1.2%) also showing strength. The $200M GMLRS contract underscores the sector’s focus on hypersonic and precision-guided systems, while L3Harris’ new Arkansas facility reflects a shift toward domestic production. Unlike some peers, L3Harris is uniquely positioned to benefit from both traditional missile systems and emerging space-based capabilities, such as the Meadowlands EW system, which addresses China’s growing space dominance. This dual exposure positions L3Harris as a key beneficiary of the $1.7 trillion defense budget proposed for 2026.

Options Playbook: Leveraging L3Harris’ Bullish Momentum with Gamma-Driven Contracts
• 200-day average: 255.71 (well below current price)
• RSI: 39.30 (oversold territory)
• MACD: -3.08 (bullish crossover near)
• Bollinger Bands: Price at 287.09 (above middle band of 282.43)

L3Harris’ technicals suggest a continuation of its bullish momentum. The stock is trading above its 200-day average and in oversold RSI territory, indicating potential for a rebound. The MACD histogram is turning positive, and the price is comfortably above the Bollinger middle band. For options traders, the key is to capitalize on the stock’s volatility while managing risk. Two contracts stand out:

• LHX20251219C285 (Call, Strike: $285, Expiry: 12/19):
- IV: 14.97% (moderate)
- Delta: 0.676 (moderate sensitivity)
- Gamma: 0.0503 (high sensitivity to price moves)
- Theta: -0.5878 (rapid time decay)
- Turnover: 3,902 (liquid)
- Leverage Ratio: 61.53% (high)
- Payoff at 5% upside (299.94): $14.94 per contract
This call option offers a balance of leverage and liquidity, ideal for a short-term bullish bet. The high gamma ensures it gains value as the stock moves higher, while the moderate IV keeps costs manageable.

• LHX20251219C287.5 (Call, Strike: $287.5, Expiry: 12/19):
- IV: 7.90% (low)
- Delta: 0.571 (moderate sensitivity)
- Gamma: 0.1041 (very high sensitivity)
- Theta: -0.4713 (moderate time decay)
- Turnover: 0 (low liquidity)
- Leverage Ratio: 155.65% (very high)
- Payoff at 5% upside (299.94): $12.44 per contract
While the low IV and high leverage make this contract attractive, the zero turnover raises liquidity concerns. Traders should use this for a directional play only if the stock breaks above $287.50.

Action Alert: Aggressive bulls should consider LHX20251219C285 into a breakout above $287.50, while conservative traders may use the 285 call as a core position. Watch for a close above $287.50 to confirm the trend.

Backtest L3Harris Stock Performance
The backtest of Lockheed Martin (LHX) following a 4% 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 performance with no significant losses during the backtest period.

L3Harris’ Rally Gains Traction – Position for a Breakout or Reversal?
L3Harris’ 3.5% intraday surge is a testament to its strategic positioning in defense modernization and space security. With the $200M GMLRS contract and new Arkansas facility driving production scalability, the stock appears poised for sustained growth. However, the RSI at 39.30 suggests a potential rebound is in play, while the MACD’s positive histogram hints at a bullish crossover. Sector leader Lockheed Martin (LMT) is up 0.79%, reinforcing the sector’s strength. Investors should monitor the $287.50 level as a key inflection point—break above it to confirm the trend, or a pullback to test the 277.60 support. For now, the data favors a bullish stance, with options like LHX20251219C285 offering high leverage for a short-term rally.