Leonardo DRS Plummets 5.27%: What’s Fueling the Selloff in Defense Tech?

Summary
• Leonardo DRS (DRS) trades at $38.06, down 5.27% from its previous close of $40.18
• Intraday range spans $37.84 to $40.16, signaling sharp volatility
• Options activity surges with 551,228 shares traded, 0.74% turnover rate
• Sector leader Lockheed Martin (LMT) declines 0.11%, hinting at broader defense sector jitters

Leonardo DRS is under pressure as its shares plunge intraday, breaking below key support levels. The selloff coincides with elevated options volume and a bearish technical setup, raising questions about catalysts. With the stock trading near its 52-week low of $28.17, investors are scrutinizing whether this is a short-term correction or a deeper shift in defense sector sentiment.

Bearish Momentum Accelerates on Technical Weakness
The sharp intraday decline in DRS is driven by a breakdown below critical technical levels. The stock has pierced the 200-day moving average of $39.54 and is now trading near the lower Bollinger Band at $37.80. A bearish crossover in the MACD (-0.74) and an RSI of 26.75 (oversold territory) confirm deteriorating momentum. While no direct company news triggered the move, the timing aligns with broader market jitters over defense spending uncertainty and a weak close in sector peers.

Defense Sector Volatility Intensifies as LMT Trails DRS’s Slide
The Aerospace & Defense sector is experiencing mixed signals. While DRS’s 5.27% drop outpaces Lockheed Martin’s 0.11% decline, both stocks reflect caution in defense stocks. Sector-wide, investors are parsing recent Pentagon budget updates and geopolitical risks, which have created a tug-of-war between long-term growth optimism and short-term profit-taking. DRS’s underperformance suggests its technicals are more vulnerable to broader market rotations.

Options and ETF Plays for a Volatile DRS Landscape
• 200-day MA: $39.54 (below current price)
• RSI: 26.75 (oversold)
• MACD: -0.74 (bearish)
• Bollinger Bands: $37.80 (lower) to $46.78 (upper)
• 52W Range: $28.17–$49.31

Key levels to monitor include the 200-day MA at $39.54 and the Bollinger Band floor at $37.80. With RSI in oversold territory, a rebound is possible, but the bearish MACD suggests caution. No leveraged ETF data is available, but sector rotation into defensive plays could offer alternatives.

Top Options Picks:
• DRS20251121P38 (Put):
- Strike: $38, Expiry: 2025-11-21
- IV: 36.06% (moderate), Leverage: 28.62%, Delta: -0.465 (moderate), Theta: -0.0024 (low decay), Gamma: 0.1129 (high sensitivity), Turnover: 1,138
- Why: High gamma and leverage amplify gains if DRS breaks below $38. A 5% downside scenario (to $36.16) yields a put payoff of $1.84.
• DRS20251121C41 (Call):
- Strike: $41, Expiry: 2025-11-21
- IV: 43.93% (moderate), Leverage: 54.37%, Delta: 0.279 (moderate), Theta: -0.0436 (high decay), Gamma: 0.0784 (moderate), Turnover: 1,687
- Why: High liquidity and leverage make this ideal for a rebound trade. A 5% upside (to $40.01) results in a call payoff of $0.01, but theta decay favors quick execution.

Action: Aggressive bears should target DRS20251121P38 for a breakdown below $38. Bulls may consider DRS20251121C41 for a short-term bounce above $40.01.

Backtest Leonardo DRS Stock Performance
Key take-aways• Sample size: 33 plunges of ≥ 5 % between 2022-01-01 and 2025-10-28. • Mean close-to-close performance after an event: – Day +5 : +2.9 % (benchmark +1.2 %) – statistically significant. – Day +10 : +4.0 % (benchmark +2.3 %). – Day +20 : +8.1 % (benchmark +4.3 %) – significant at the 5 % level. – Day +30 : +8.4 % (benchmark +6.3 %). • Win-rate stays above 65 % through most of the 30-day window and reaches 82 % on Day 21. • Overall, DRS has tended to rebound promptly and persistently after a sharp intraday sell-off, out-performing its own drift over identical holding periods.Parameter notes1. Price type: Close prices were used (the default and most common choice for event studies). 2. Back-test window: The engine’s default 30-day horizon was retained because the user did not specify another holding horizon. 3. Date range: Set to 2022-01-01 → 2025-10-28, covering “2022 to now” using the latest available trading day. You can examine every statistic and visualization in the interactive panel below.Feel free to explore different thresholds, longer/shorter holding windows, or layer in risk controls if you’d like to refine the analysis further.

Time to Act: DRS at Pivotal Technical Crossroads
Leonardo DRS’s breakdown below key support levels signals a critical juncture. While oversold RSI hints at potential rebounds, the bearish MACD and sector jitters suggest caution. Investors should prioritize short-term options like DRS20251121P38 for downside bets or watch for a rebound above $40.01. Meanwhile, sector leader Lockheed Martin’s -0.11% decline underscores broader defense sector fragility. Watch for a $37.80 breakdown or a reversal above $40.01 to dictate next steps.