For years, drone technology has straddled the line between commercial potential and defense utility. While the technology has matured, regulatory hesitation has held back widespread adoption. That may now be changing. From air cargo and urban air mobility (UAM) to tactical military drone systems, the U.S. government is sending a clear message: it's time to secure next-generation air dominance.

This moment echoes the early days of the electric vehicle revolution, where policy leadership paved the way for industrial and capital acceleration. Similarly, drones now appear to be entering the initial phase of a "policy catalyst, capital follow-through" cycle.

Why This $82.5 Billion Market Is Too Big to Ignore

The global drone market is taking off. Projected to soar from about $8.8 billion in market value to more than $82.5 billion by 2032. Drones are seeing big demand in the U.S. military, for crop monitoring and spraying with agriculture, logistics for delivery and warehousing, in the oil and gas industry, in mining and construction, in emergency management, and in renewable energy projects.

President Donald Trump signed executive orders to bolster U.S. defenses against threatening drones last Friday and to boost electric air taxis and supersonic commercial aircraft, the White House said.

Trump sought to enable routine use of drones beyond the visual sight of operators - a key step to enabling commercial drone deliveries - and reduce U.S. reliance on Chinese drone companies as well as advance testing electric vertical takeoff and landing aircraft.

The companies best positioned to capitalize on demand for drones are Ondas Holdings, Unusual Machines, AeroVironment, Kratos and Red Cat.

AeroVironment: The Future is AV

AeroVironment has firmly established itself as a global leader in unmanned aircraft systems (UAS) technology, primarily catering to military and commercial markets. Known for innovation and reliability, the company designs, develops, produces, and supports a wide range of drones capable of sophisticated missions, including reconnaissance, surveillance, and precision strike capabilities.

AeroVironment consistently secures substantial contracts with the U.S. Department of Defense and allied governments, solidifying its reputation as a trusted supplier of tactical drones. Their Switchblade drones, in particular, have seen increased demand due to their effectiveness and versatility.

Option Strategy:

1. Bull Call Spread (Cost-Efficient)

• Structure: Buy lower strike call + sell higher strike call.

• Example:

• Buy June 20 $195 Call

• Sell June 20 $210 Call

  $AVAV Vertical 250620 195.0C/210.0C$

• Net Cost: -$522.5

• Break-Even: $200.22

• Rationale: Reduces upfront cost; benefits from moderate upside.

2. Cash-Secured Put (Neutral-to-Bullish)

• Structure: Sell a put to collect premium or acquire shares at a discount.

• Example:

  • June 20 $190 Put :

    $AVAV 20250620 190.0 PUT$

  • Mid-Price: $4.0 (bid $3.5 / ask $4.5)

  • Premium Collected: $4.0/share

  • Effective Purchase Price if Assigned: $186.00 (strike - premium)

  • Probability of Profit: 33.70%

  • Rationale: Ideal if willing to own AVAV below current price; high short-term IV ( 47.03% ).

Kratos: Expands Drone Dominance

Kratos benefits significantly from increasing global defense spending, particularly driven by heightened geopolitical tensions. Its unmanned combat aerial vehicles (UCAVs) and loyal wingman drones have gained considerable attention, offering cost-effective solutions for modern warfare.

Kratos maintains strong ties with the U.S. military and allied defense agencies, regularly securing significant defense contracts. Notably, the U.S. Air Force and Navy have consistently demonstrated confidence in Kratos' drone capabilities through ongoing procurement and testing agreements.

Beyond defense, Kratos has begun exploring civilian applications of its drone technologies, particularly in security, infrastructure inspection, and disaster response. Its expanding global presence through international partnerships further enhances its growth potential.

Option Strategy:

1. Long Call (Long-Term Bullish)

• Structure: Buy Nov $40 Call (mid-price: $6.25).

  $KTOS 20251121 40.0 CALL$

• Rationale:

  • Despite strong policy support, commercialization for relevant enterprises may still take 2–3 years.

  • This may signal more than short-term speculation—it could mark the beginning of a policy shift.

  • Drones have entered the early stage of 'policy catalysts driving capital inflows'.

2. Bull Call Spread (Moderate Upside, Lower Cost)

• Structure:

  • Buy July 18 $37.5 Call (mid-price: $4.40).

  • Sell July 18 $42.5 Call (mid-price: $1.70).

    $KTOS Vertical 250718 37.5C/42.5C$

  • Net Debit: $2.70 ($4.40 - $1.70).

  

  Rationale:

  • Cost Efficiency: Reduces upfront capital vs. outright long call.

  • Target Zone: Max profit ($5.00 per spread) if KTOS closes ≥$42.5 by expiry (aligns with analyst high target of $41.0).

  • IV Crush Protection: Limits downside from volatility contraction.