Price Forecast:

Bullish Case: Lockheed Martin is poised for growth driven by strong defense spending, successful contract acquisitions, and ongoing projects like Artemis, making it an attractive investment as geopolitical tensions rise.

Bearish Case: Recent sanctions against Lockheed's subsidiaries by China and ongoing supply chain issues, especially concerning the F-35 program, present significant risks that could negatively impact stock performance.

Potential Outcomes:

• 1. Continued defense spending increases: 65% probability
• 2. Successful resolution of supply chain issues: 40% probability
• 3. Heightened geopolitical tensions lead to contract boosts: 70% probability
• 4. Regulatory challenges negatively affect contracts: 30% probability

Trading Oracle: Given current volatility spikes, consider using a bullish debit spread like LMT 550/560 calls expiring December. High implied volatilities (54.4% and 43.0%) suggest opportunity for capturing premiums as bullish events unfold. Focus on short-term gains with positive edge and manageable risks.

November 22, 2024