Tactical Long Call Plays in Homeland Security: BigBear.ai (BBAI) and Ondas (ONDS) Ride War-Driven Procurement Surge

The immediate catalyst is a war that is already being fought and paid for at an unprecedented pace. The U.S. military has reportedly spent at least $11.3 billion in the first six days of operations. That figure, which exceeds earlier estimates for the conflict's first 100 hours, signals a massive, immediate draw on defense stockpiles. This isn't just a cost; it's a trigger for a procurement surge.

The mechanism is clear. Major defense firms have already agreed to "quadruple production" of key weapons following a White House meeting. This directive from the top, aimed at meeting urgent wartime demands, creates a direct and massive tailwind for the entire defense industrial base. The need to replenish consumed munitions and support extended operations will accelerate orders across the board.

This is where ONDS and BBAI fit in. They are not the primary weapon-makers, but they are critical enablers for the defense and homeland security ecosystem that is now under intense operational strain. BigBear.ai's core business is providing AI and analytics solutions for defense, intelligence, and homeland security. In a high-tempo conflict, the demand for predictive analytics, threat detection, and operational efficiency tools spikes. As agencies scramble to manage the surge, companies like BigBear are positioned to support that effort.

Similarly, Ondas Holdings provides wireless communications for public safety and homeland security. When operations intensify, the reliability and capacity of communication networks become paramount. Increased funding for homeland security and defense operations often flows to the supporting infrastructure that keeps forces connected and coordinated. The war-driven spending cycle directly benefits these specialized tech providers.

Options Setup: Implied Volatility and Strike Selection

The tactical edge here hinges on whether the current options pricing offers a favorable risk/reward for a long call. The setup for each stock looks distinct.

For Ondas Holdings, the key metric is implied volatility. The stock's Implied Volatility (IV) reading of 1.09 suggests premiums for long options are only moderately elevated relative to historical volatility. In a volatile geopolitical environment, this isn't a screaming buy signal, but it also doesn't price in extreme fear. The premium is fairly priced, which means the risk/reward for a directional bet isn't being artificially skewed against you. You're not paying a huge "fear tax" for the option.

For BigBear.ai, the picture is different. The stock trades at $3.80, down 29.6% year-to-date and near its 52-week low. This reflects limited recent optimism and likely cheaper option premiums. A long call with a strike price at or near the current $3.80 level offers a defined risk/reward profile. The breakeven point is clear: the stock needs to climb above the strike price plus the premium paid. Given the stock's depressed valuation and the war-driven tailwind, this could be a low-cost entry point for a catalyst-driven move.

The bottom line is that both stocks present a tactical opportunity, but the mechanics differ. Ondas offers a fairly priced bet on a volatile catalyst, while BigBear provides a cheaper entry into a stock that has significant room to recover if the defense spending tailwind gains momentum.

Tactical Risks and What to Watch

The investment case here is binary: it hinges on the conflict's duration and its impact on defense budgets. The primary risk is a swift de-escalation. The war is now in its third week, and the INSS estimates the US and Israel have carried out more than 2,000 strikes. While this high tempo is driving immediate spending, it also raises the risk of exhaustion for both sides. If the conflict ends quickly, the urgent need to replenish munitions and fund new operations would vanish, removing the core catalyst for these stocks.

For BigBear.ai, a key near-term catalyst is concrete evidence that its AI and analytics solutions for defense and homeland security are being directly funded by the war's budget surge. Watch for any specific contract announcements or revenue guidance from the company that ties its performance to increased defense spending. The stock's depressed valuation makes it sensitive to any positive news flow, but it needs to see that tailwind materialize in the numbers.

For Ondas Holdings, the focus should be on policy and budget specifics. The stock benefits from increased Homeland Security and government spending. Monitor the broader defense sector's performance; sustained strength in major contractors like Lockheed Martin and Northrop Grumman, which have already posted big gains, would validate the spending tailwind. A sector-wide pullback could signal fading demand. More specifically, watch for any mention of increased homeland security funding in the defense budget or policy announcements that could directly boost Ondas's wireless communications business.

The bottom line is that both plays are tactical bets on a prolonged conflict. The setup offers defined risk, but the payoff depends entirely on the war's trajectory. Keep a close eye on the conflict's pace and the resulting budget announcements to see if the catalyst holds.