Shielded by the Dome: The Trade Behind the Defense Tech Boom
Nations are re-arming, but it's not the same war. There was a time when the defense sector followed a fairly predictable rhythm — post-conflict surges, then declines during peacetime. But the world has changed.
Since early 2022, the Russia-Ukraine war has reignited global anxiety. Then came escalating tensions in Taiwan, North Korea’s missile tests, cyberattacks on critical infrastructure and Iran-backed proxies lobbing drones across borders. The post-WW II playbook is being rewritten in real time.
This new landscape demands round-the-clock, tech-enabled defense systems, especially those that intercept threats before they make impact.
That’s where the “Golden Dome” comes in.
The phrase “Golden Dome” is a nod to Israel’s Iron Dome, a mobile air defense system designed to detect, assess and destroy short-range rockets and artillery shells. It has a 90%+ interception rate.
Its success has inspired defense programs across the globe to adopt or develop similar layered defense systems, blending ground-based interceptors, satellite tracking and radar, hypersonic missile detection, and AI-driven threat assessment.
A March 2024 Wall Street Journal article titled “Global Arms Race Boosts Defense Giants” noted: “The US is investing heavily in space-based sensors and integrated missile shields to prepare for next-gen conflict environments, and defense firms like Northrop Grumman and Raytheon are at the heart of this transformation.”
The Golden Dome isn't just a system — it’s a symbol of modern warfare preparedness. Countries are racing to build their own domes, and US defense contractors are cashing in.
Names that have been catching bids include Lockheed Martin (LMT), which is known for the F-35 fighter, missile systems and hypersonics. The company has recently signed contracts for US missile defense updates and space-based sensors. Its chart is consolidating near key support, but showing signs of institutional interest.
Another beneficiary, iShares U.S. Aerospace & Defense ETF (ITA), offers passive exposure to the whole sector. It’s deal for investors who want a hands-off way to ride defense momentum. However, it has a limited upside vs. single-stock setups.
Northrop Grumman (NOC) is also surfing the defense wave. The company’s deeply embedded in next-gen radar, satellite and aerospace tracking systems. It’s working with the Department of Defense on advanced infrared and ballistic missile defense. Shares recently broke out of multi-week balance with increased volume — a clean setup.
Of all the industry’s companies, I’m Choosing Northrop Grumman. Why? Because fundamentally and technically it fits the moment. Defense is becoming a portfolio staple again, especially among institutional allocators. And the company’s performance closely tracks global headlines and defense spending metrics.
Plus, Northrop Grumman just landed key Pentagon deals related to missile tracking and space surveillance, and its multi-week range has resolved with a break and retest above a high-volume node,
Instead of just buying shares, I’m deploying a zero extrinsic back ratio, an options strategy that mimics long stock but with key benefits.
Here’s how it works: You sell one at-the-money call, buy two further out-of-the-money calls and se volatility skew to build this for little to no cost (zero extrinsic value).
I’m using it because there’s no time decay working against me, and I know my breakeven levels and downside. If it runs, the second long call gives me convexity, and I can use my capital elsewhere instead of tying it up in stock.
Defense stocks are no longer a “war-only” play. They’re becoming part of the new permanent infrastructure of modern nations. Just like energy security became a national priority in the 1970s, missile defense and aerospace security are becoming critical now.
A March 2023 report from the Center for Strategic and International Studies stated: “Modern missile defense is no longer a niche. It’s a foundational layer in national security planning for the US and its allies.”
With budgets swelling in the US, Japan, Europe and the Middle East, defense contractors like Northrop are riding long-term tailwinds that extend far beyond short-term headlines.
If you missed last week’s post on sector rotation and institutional volume flows (flowacademy.com/blog/sector-rotation-vol), this trade lines up perfectly with the defense theme that’s gaining momentum again.
The Golden Dome isn’t just a piece of tech. It’s a signal that the global defense economy is shifting as governments budget for risk long before conflict arises.
That protection is the new growth.
And while the world watches missiles on the news, traders are quietly positioning behind the companies building the shield. I’m choosing Northrop Grumman — and I’m doing it with structure.
Errol Coleman appears on the tastylive network shows Today’s Assignment and Trades on the Go.
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