$LMT · Verified Investing · 2026-11-03

Before we get a little further into that, I'm looking at a setup from a couple weeks ago. One of the defense beasts, Lockheed Martin. Originally, we passed on it because the spread between us buying and us selling or excuse me, between the bid and the ask, it was too wide.

It was about 20% and that's wide for slippage. The strikes weren't liquid and the premiums were too expensive as a buyer.

And it was because this was also right before the earnings print. So now Lockheed has resolved that earnings sprint and they reported a few days ago, but they since have just shot up to the moon on the charts.

So I'm going to be delving on the uh I'm going to be showing you guys a technical setup on Lockheed. We'll see if we can develop a thesis to take to the chain.

All right, guys. I have a killer setup right here on Loheed Martin. Okay. And right now, well, first before we go into my thesis, let's go into the technicals.

I want you to take your attention to these first white trend lines here. So, first this is where price was uh just two weeks ago at $500 $4.99 and then we reported earnings and have since just gone straight up.

This trend line can't even keep up with how steep it is. That's not normal for price action um to just go straight up. Usually, it kind of kind of pulls you get healthy and deep pullbacks.

For here, we're just going straight up. So right now I think as prices get more extension think of like a rubber band ext extending and extension as it gets further extens extended you expect a sharp b uh pullback with that.

So with this what what I'm getting at is that I think this is getting stretched too far. I think this favors um for a sell to come in and for that rubber band effect to come in for lock to start coming in and test some key support levels.

Yeah. So right now I kind of have a bearish lean, but let's continue. So we have this white trend line that is very steep that price keeps going up. But then we also have this um less steep trend line.

Now this, if you want to do this with me at home, this is from the April 23rd pivot high right here. And we're going over these higher highs. Okay, that's what this trend line is capping.

These higher highs as price pushes higher. it t it hits this trend line in five attempts in a row, five days in a row, it could not beat that trend line even with frequent attacks.

Now, we had a deep healthy pullback. They reported those earnings and retail loved it and they've bought it up until it's getting stopped. Now, look at that trend line again that we haven't touched since September.

Just on Friday, as the market was seeing a huge sell-off, money was rotating into defense. We do expect that. But even then, it pierced above this blue level. It did not close above it.

It wicked into that trend line. So, another hit on that trend line and got rejected. And see, guys, the red bar candle here, it closed below that level. So, showing some weakness.

If this closed above, that would say, okay, maybe this is trying to get some legs. Move on higher. Okay, now you have this chart set up.

So, what adds to my conviction? Because I want to make sure I have multiple factors before I enter this trade. All right, two f two more indicators that I want you guys to add to your repertoire.

Let's start with one. One being is the RSI or the relative strength index. So, we're now sitting in oversold overbought territory, excuse me. Overbought meaning we're above 70.

And now we've been doing that on the daily for a few days now. Once price gets into above the 70 range, it's getting into overbought territory and should come back under 70 and relieve some momentum pretty much.

And then so that's kind of adding to my conviction of bearish thesis.

And now two volume. So, as we see here, looking at these green and red candles here, if we isolate down, we're seeing a lot large bars from the bottom here after that earnings print, a lot of volume was coming in and was p and was pushing price up.

But as we see, each volume candle now is getting lower and lower and lower. So, what this tells me as a technical trader, buyers are getting exhausted here. So sellers could start stepping up here and shutting this price down.

And with price showing rejection here at this 645, I'm leaning to buy a put here with a bearish thesis. Looking at a strike anywhere from about 645, excuse me, 640 to about 650.

In that zone, we'll delve on the chain together and see if we can come up with a thesis or a trade.

So, we waited for that Lockheed Martin to report. So, and that that was a few days ago. We're a little late on that, but that IV crush still occurred. So, now if we can still find a good setup with that,

and check on those two who just reported yesterday and then we will not forget of course to tackle Loheed Martin.

so if we're looking at Apple 2, um, so now let's check out Lockheed as we were delving into those. Let's see if we could find a trade setup for today.

You know, I drive by Lockheed Martin every day driving to work. Um, and it looks like a pretty, you know, they say a defense a defense name. They definitely are. They got high security around their gates. Pretty cool. Pretty cool.

IV percentile is coming in about 35%. So out of a hundred, we're in kind of the lower third quadrant. So on yesterday's close, we were a bit bullish. Okay. Especially as defense names were rising.

Um the put call interest was coming in at 0.8. So bullish. But today volume today is coming in at 1.67. So puts today are outweighing those calls. M. So, pretty much this could signal more of a bearish read. Yeah. Okay. Expecting it to go down.

Now, we have to make sure when we're trading Lockheed, it's already a lower volume stock. So, we got to pick a strike that has good liquidity.

So, I'm going to just pop up here where it says 10 strikes. I'm going to try and give me just a little more strikes. And then we looking anywhere from that 640 to 650 range. and we were looking to buy a put now.

I like to have time on my side. So, I'm looking anywhere from about 30 to 45 days out for buying my put. So, I'm going to check out this December 4th strike right here. And I'm just not getting a lot not a lot of volume coming in here.

Not a lot of open interest either. We're seeing a lot um right here with some 67 at the 650 line, but I need I need a little more than that.

Let's see. See how the 45 days. Okay, there we go. All right. 45 days out. Getting much more here. Now we're looking for to buy a put. Let's maybe go January. I want to see some little heftier want to see some heftier numbers here.

March 2027. M like I like kind of this one so far better. Yeah, if we get this this 650 right here, we would already be in the money. So, we would have to pay up for that. Now, if we bought this here, one contract here is going to be about 32 to 3,300 bucks.

Um some volume's confirming it here. We about 88 people. Okay. Open interest. Let's check just two more. May. Yeah, I'm liking this one the best so far.

We're going to have to pay up a little bit on this one. But if we bought a put here at this 650, that 650 strike. Now, we're lining that up with the top of that resistance that we pointed out on the charts.

That blue line that was at the top of that pivot. We already showed price wicked into that level but was not accepted and confirmed and was and it uh faded and closed rather down to the downside and closed red.

And now we're trying to push today green but still coming in on lower highs.

So that's the play for today I'm looking at is this 650 strike here. Uh we're buying a put. We're making sure that we have uh about a 100 people here uh on open interest. some volume is confirming and that put call volume today which is new money that is coming in as bearish to kind of add to our conviction.