Rocket Lab Soars 6% on Morgan Stanley Upgrade and $816M SDA Contract—Is This the Start of a New Bull Run?

Summary
• Morgan Stanley upgrades Rocket Lab to Overweight with a $105 price target, signaling 16% upside.
• Rocket Lab secures $816 million SDA Tranche 3 Tracking Layer contract, its largest deal ever.
• Intraday price surges 6.06% to $96.26, hitting 52-week high of $99.58.

Rocket Lab (RKLB) is surging on a perfect storm of analyst optimism and blockbuster contract wins. The stock’s 6.06% rally—its most volatile session in months—has been fueled by Morgan Stanley’s strategic re-rating and a $816 million defense contract that positions the company as a prime player in the Golden Dome program. With technicals aligning and options volatility spiking, investors are scrambling to position for a potential breakout.

Morgan Stanley’s Strategic Re-Rating Ignites Rocket Lab’s Rally
Rocket Lab’s 6.06% intraday surge is directly tied to Morgan Stanley’s upgrade from Equalweight to Overweight, coupled with a $105 price target. The firm highlighted the company’s 52.42% revenue growth, its $816 million SDA contract, and its positioning in the capacity-constrained medium-lift launch market. The SDA deal, which includes 18 satellites for the Tracking Layer Tranche 3 program, not only validates Rocket Lab’s technical capabilities but also signals long-term revenue visibility. Analysts at Needham and Baird have echoed similar bullish sentiments, with price targets ranging from $72 to $100, reinforcing the stock’s momentum.

Aerospace & Defense Sector Gains Momentum as Rocket Lab Leads Innovation Charge
The Aerospace & Defense sector is experiencing a renaissance, driven by geopolitical tensions and increased defense spending. Rocket Lab’s $816 million SDA contract places it in direct competition with established players like Lockheed Martin (LMT), which saw a 0.31% intraday gain. However, Rocket Lab’s agility and focus on small-satellite launches differentiate it from traditional heavyweights. The sector’s broader tailwinds—fueled by Trump-era defense policies and NATO expansion—suggest that companies with niche capabilities, like Rocket Lab’s Electron and Neutron rockets, are poised to outperform.

Options and ETF Playbook: Capitalizing on Rocket Lab’s Volatility and Sector Tailwinds
• MACD: 8.55 (above signal line 7.68), indicating bullish momentum.
• RSI: 67.10 (overbought but not extreme), suggesting potential for continuation.
• Bollinger Bands: Price at 96.26 (Upper: 97.31, Middle: 77.33), near 52-week high.
• 200D MA: 44.69 (far below current price), signaling long-term divergence.

Rocket Lab’s technicals and options data present a compelling case for aggressive positioning. The stock is trading near its 52-week high, with RSI and MACD confirming bullish momentum. For options traders, two contracts stand out: RKLB20260123C90 and RKLB20260123P89.

RKLB20260123C90 (Call):
• Strike: $90, Expiry: 2026-01-23
• IV: 71.32% (high volatility)
• Leverage Ratio: 11.66% (moderate)
• Delta: 0.774 (high sensitivity to price moves)
• Theta: -0.539 (rapid time decay)
• Turnover: 1.68M (liquid)
• Gamma: 0.0294 (responsive to price swings)
• Payoff at 5% Upside: $5.31 (max(0, 101.07 - 90)).
This call option is ideal for capitalizing on a short-term breakout above $90, with high liquidity and gamma ensuring responsiveness to price swings.

RKLB20260123P89 (Put):
• Strike: $89, Expiry: 2026-01-23
• IV: 73.77% (high volatility)
• Leverage Ratio: 62.86% (aggressive)
• Delta: -0.202 (moderate downside sensitivity)
• Theta: -0.0776 (slow time decay)
• Turnover: 32.687K (liquid)
• Gamma: 0.0267 (moderate responsiveness)
• Payoff at 5% Upside: $0.00 (max(0, 89 - 101.07)).
While the put offers limited upside, its high leverage and moderate delta make it a hedge against a pullback, especially if the stock consolidates after hitting $99.58.

Action Alert: Aggressive bulls should target RKLB20260123C90 for a breakout above $90, while cautious investors may use RKLB20260123P89 to lock in gains. Watch for a close above $97.31 (Bollinger Upper Band) to confirm the trend.

Backtest Rocket Lab Stock Performance
The backtest of Rockwell Automation (RKLB) following a 6% intraday increase from 2022 to the present indicates positive short-to-medium-term performance. The 3-Day win rate is 50.89%, the 10-Day win rate is 54.65%, and the 30-Day win rate is 62.57%, suggesting that the stock tends to perform well in the immediate aftermath of the intraday surge. The maximum return observed was 20.51% over 30 days, indicating that there is potential for significant gains if the momentum from the intraday surge is sustained.

Rocket Lab’s 6% Rally: A Catalyst-Driven Breakout or Overbought Correction?
Rocket Lab’s 6.06% surge is a textbook example of a catalyst-driven breakout, fueled by Morgan Stanley’s strategic re-rating and a landmark $816 million SDA contract. While technicals suggest the stock is overbought (RSI: 67.10), the alignment of sector tailwinds and options liquidity points to a sustainable rally. Investors should monitor the 52-week high of $99.58 and the 200-day MA at $44.69 as critical levels. For context, sector leader Lockheed Martin (LMT) is up 0.31%, reinforcing the sector’s strength. Act now: Position in RKLB20260123C90 for a potential $105 target or use RKLB20260123P89 to hedge against a pullback. The next 72 hours will test whether this is a parabolic move or a consolidation phase.