Trade Alert: Another Bite At The Apple

Powell's revenue miss yesterday gives us another entry into a picks & shovels play on the nuclear boom. Plus, a PA Top Names trade in a similar space.

Taking the Other Side of a Good Company’s Bad Print

Context. In late May, we highlighted Powell Industries (POWL 0.00%↑) as a classic picks & shovels way to play the nuclear build-out and the broader scramble for power capacity driven by AI data centers.

Powell doesn’t build reactors—it builds the switchgear, e-houses/packaged power rooms, bus duct, and related equipment that sit at the center of high-reliability power distribution. That’s where the sustained demand is.

Since then. Nuclear-adjacent names have reminded everyone why this theme matters: OKLO (OKLO 0.00%↑) and Centrus Energy (LEU 0.00%↑) have both ripped recently, reflecting investor appetite for the “more electrons, more reliability” trade.

We have an open trade in OKLO, and just exited our LEU trade today for a 225% gain:

• Call spread on Centrus Energy (LEU 7.03%↑). Entered at a net debit of $6 on 6/9/2025; exited at a net credit of $19.50 on 8/6/2025. Profit: 225%.

Powell’s report after Tuesday’s close cut against that grain near-term (EPS strong, revenue light), and the stock sold off. Nevertheless, we exited our bullish trade on Powell today for a 124% gain:

• Call spread on Powell Industries (POWL 4.84%↑). Entered at a net debit of $6 on 5/27/2025; Exited at a net credit of $13.45 on 8/6/2025. Profit: 124%.

What changed (and what didn’t)

• Changed: Near-term sentiment. A revenue miss shakes out fast money and compresses multiples in the short run.

• Didn’t change: The structural drivers—data-center power needs, grid modernization, and growing nuclear momentum—are intact. Powell’s role supplying the gear that ties generation to load hasn’t changed because one quarter was lumpy.

Our Plan

We’re using the post-earnings drop to add a bullish options position in POWL. Put options have become more expensive into and after the slide, which lets us structure a trade that benefits from elevated put pricing while maintaining meaningful upside if the shares stabilize and grind higher.

A second “picks & shovels” play

We’re also entering a bullish trade on one of Portfolio Armor’s Top 10 names from Tuesday’s close—another company levered to the power industry’s capex cycle (think test/diagnostics and grid-reliability tools rather than generation itself).

How this fits our macro map

Both trades line up with our interlocked themes of Reindustrialization, Embodied AI, and Energy: factories and robots need power, AI data centers need a lot of power, and the grid needs to be tougher and smarter to deliver it.

We want to own the suppliers that make that possible.

Details on both trades below.

Today’s Powell Trade

The stock again is Powell Industries (POWL 0.00%↑), and our trade is a combo consisting of four legs, each expiring on February 20th, 2026:

1. Buying the $230 strike call,

2. Selling the $280 strike call,

3. Selling the $220 strike put,

4. And buying the $200 strike put,

For a net debit of $6. The max gain on 1 contract is $4,400, the max loss is $2,600, and the break even is with POWL at $236*. This trade filled at $5.80.

Today’s Top Names Trade

The stock is Esco Technologies (ESE -1.55%↓). We actually have an open trade on this one already, a call spread expiring next week. Since it was our #1 name yesterday, and it fits with our themes, I figured I’d add another trade on it, going out further. Today’s trade is another combo consisting of four legs:

1. Buying the $195 call expiring on December 19th,

2. Selling the $210 call expiring on December 19th,

3. Selling the $190 put expiring on August 15th,

4. And buying the $180 put expiring on August 15th,

For a net debit of $3. The max gain on 1 contract is $1,200, the max loss is $1,300, and the break even is with ESE at $187.88*.

*This break-even is Fidelity’s model at entry for a mixed-expiry combo. Our true expiration break-even = lower strike of the long-dated call spread + total net debit, adjusted by the realized P/L on the short-dated put spread. The displayed “max loss” is for the life of the combo, not at the weekly expiry.

Exiting These Trades

To minimize assignment risk, I’m going to start placing separate GTC exit orders on the put spreads and call spreads for these combos, even when all legs have the same expiration dates. With that in mind, I updated my exit strategy for our recent Progressive (PGR 0.00%↑) combo in the post below.

For today’s trades:

• POWL Put Spread: I’m going to open a GTC order to exit at a net debit of $0.20, and raise that price, if necessary, as we approach expiration.

• POWL Call Spread: I’m going to open a GTC order to exit at a net credit of $45, and lower that price, if necessary, as we approach expiration.

• ESE Put Spread: I’m going to open a GTC order to exit at a net debit of $0.20, and raise that price, if necessary, as we approach expiration.

• ESE Call Spread: I’m going to open a GTC order to exit at a net credit of $14.50, and lower that price, if necessary, as we approach expiration.