Pentagon Awards Richest Contract
Just
one day before the Pentagon awards its richest contract in history,
shares of both Boeing
(
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PowerRating) and Lockheed
Martin Corp.
(
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PowerRating) are quite active. Likewise, the options on
each are getting considerably more attention as that self-imposed deadline
approaches.
The Joint Strike Fighter (JSF) contract is so large due to the specifications
the aircraft needs to meet: supersonic speed, vertical takeoff and landing and
an array of artillery that will make this plane both the envy and worst
nightmare of every military opponent in the world.
For
most of this week, Lockheed seemed to be the favorite, but with less than 24
hours to go, Boeing is seeing some increased interest, indicating the outcome is
still a coin toss.
The
option volume in LMT is up six-fold over last Thursday, and its volatility is
also up substantially. The November 50 Straddle in LMT is up to $6.25,
registering a robust 60% volatility, making a directional bet much more
expensive by comparison to its normal volatility of 40%. BA options are
similarly pricing out in the 60% range.
Be sure to watch “Doctor
J and the Traders” this afternoon (4 PM CDT) on www.WEBFN.com.