L3Harris Surges 4% on $200M Rocket Motor Contract: Can This Defense Giant Sustain Momentum?

Summary
• L3Harris (LHX) surges 4.05% to $288.60, hitting a 52-week high of $289.41
• $200M GMLRS propulsion contract awarded, first through new Arkansas facility
• RSI at 39.3 and MACD crossover signal potential continuation
• Options chain shows heavy call buying at 280–285 strike prices

L3Harris Technologies is riding a wave of optimism as its shares surge over 4% intraday following a landmark $200 million contract for guided rocket motor production. The stock's sharp move coincides with a major production milestone at its new Arkansas facility and growing demand for military propulsion systems. With the defense sector tightening its grip on market leadership, investors are now scrutinizing whether this momentum is sustainable or a short-term spike.

Defense Production Catalyst Ignites L3Harris Rally
The 4.05% intraday surge in L3Harris shares is directly tied to the company's $200 million GMLRS propulsion contract, which marks the first order through its newly constructed Arkansas facility. This production milestone validates the company's 30% annual capacity expansion and 80% output increase in missile propulsion systems. The contract's strategic significance is amplified by the U.S. Space Force's recent advancements in electromagnetic warfare systems, positioning L3Harris at the intersection of terrestrial and space-based defense technologies. Management's emphasis on 'delivering critical propulsion capability at scale' aligns with Pentagon modernization priorities, creating a clear revenue tailwind.

Aerospace & Defense Sector Gains Altitude as L3Harris Leads
The Aerospace & Defense sector is showing robust momentum, with L3Harris outperforming its peers. Sector leader Lockheed Martin (LMT) is up 1.26% on the day, reflecting broader defense spending optimism. The sector's strength is underpinned by $36.3 billion in L3Harris' current backlog and $21.74 billion in trailing twelve-month revenue. As the U.S. military accelerates modernization programs—from hypersonic weapons to space-based EW systems—defense contractors with diversified capabilities like L3Harris are capturing market share. The sector's 0.66 beta suggests it's outpacing broader market volatility, making it an attractive haven for risk-on capital.

Options Playbook: Capitalizing on L3Harris' Bullish Momentum
• 200-day MA: $255.71 (well below current price)
• RSI: 39.3 (oversold territory)
• MACD: -3.08 (crossing above -3.24 signal line)
• Bollinger Bands: 288.60 near upper band at 298.48
• 30D support: $277.60–278.19

L3Harris is trading near its 52-week high with technical indicators suggesting continued upward momentum. The stock's 4.05% intraday gain has pushed it to the upper Bollinger Band, while the MACD crossover and oversold RSI indicate potential for further gains. Two options contracts stand out for aggressive positioning:

• LHX20251219C280
- Call option with 280 strike, expiring 12/19
- IV: 23.01% (moderate)
- Leverage ratio: 28.61%
- Delta: 0.7976 (high sensitivity)
- Theta: -0.6796 (rapid time decay)
- Gamma: 0.0256 (moderate price sensitivity)
- Turnover: 31,811 (high liquidity)
- Payoff at 5% upside: $14.30/share (280 strike) → $14.30 profit
- This contract offers high leverage with strong liquidity, ideal for capturing a continuation of the current rally.

• LHX20251219C285
- Call option with 285 strike, expiring 12/19
- IV: 23.99% (moderate)
- Leverage ratio: 43.02%
- Delta: 0.6389 (moderate sensitivity)
- Theta: -0.6406 (rapid time decay)
- Gamma: 0.0326 (high price sensitivity)
- Turnover: 3,902 (reasonable liquidity)
- Payoff at 5% upside: $9.30/share (285 strike) → $9.30 profit
- This contract balances leverage and liquidity, offering a more conservative entry point for the same bullish scenario.

Given the stock's proximity to its 52-week high and strong technical setup, aggressive bulls should consider LHX20251219C280 for maximum leverage. A 5% upside scenario (targeting $302.53) would yield a 50%+ return on this contract. For a more conservative approach, LHX20251219C285 offers a 21% return under the same scenario. Both contracts benefit from high gamma and moderate IV, making them responsive to continued price action.

Backtest L3Harris Stock Performance
The backtest of L3Harris' (LHX) performance 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 but conservative performance during the backtested period.

L3Harris at Inflection Point: Ride the Wave or Secure Profits?
L3Harris' 4.05% surge is a clear signal of its strategic positioning in the defense modernization era. With a $200 million contract validating its production capacity and a $36.3 billion backlog, the company is well-positioned to capitalize on sustained defense spending. The technical setup—MACD crossover, oversold RSI, and proximity to 52-week highs—suggests further upside potential. However, traders should monitor the 288.60 level as a key resistance. If the stock breaks above this, the 298.48 upper Bollinger Band becomes the next target. Sector leader Lockheed Martin's 1.26% gain reinforces the sector's strength. For investors, the 280–285 call options offer a high-leverage way to participate in this momentum. Watch for a breakdown below 277.60 support to signal a shift in sentiment.