What is the PrSM missile that the US used for the first time in Iran?

Market structure: Lockheed Martin (LMT) and suppliers of MLRS/HIMARS systems are clear near-term winners — PrSM adoption increases per-unit revenue (2x missile load per pod) and gives pricing leverage on long‑range munitions; expect incremental contract awards of $1–5bn/year across prime contractors over 12–36 months. Losers are cyclical, rate‑sensitive sectors (airlines, leisure) if oil spikes and risk‑off flows persist, and regional logistics players within Iran’s strike envelope. Cross‑asset: near‑term safe‑haven flows should bid USTs and USD, while sustained Gulf instability would push Brent above $85–95/bbl and lift defense equity vols by 20–40% relative to broader market.

Risk assessment: tail risks include rapid escalation to broader US‑Iran conflict (weeks) or an asymmetric retaliation disrupting Gulf oil chokepoints (30–90 days), both driving >15% swings in oil and equities. Supply‑side limits (HIMARS inventory, PrSM production ramp, component sourcing) are second‑order constraints that cap upside until Lockheed proves sustained monthly delivery cadence (target: >24 missiles/mo within 12 months). Catalysts: DoD procurement announcements, FY26/27 budget votes (next 60–180 days), and additional operational use will accelerate repricing.

Trade implications: tactically favor LMT and defense ETFs while hedging macro risk; implied vols on LMT/ITA should remain elevated — use defined‑risk call spreads to capture upside without long vol exposure. Reduce or hedge airline exposure if Brent sustains >$90 for 30 days. Rotate 150–300bp from rate‑sensitive cyclicals into Aerospace & Defense (XAR/ITA) for 3–12 months.

Contrarian angles: consensus assumes permanent margin expansion for primes — but production bottlenecks and export controls could cap free cash flow for 6–12 months, making near‑term outperformance binary. A cheaper, higher‑growth way to play is selective small‑cap suppliers with booked components for PrSM (non‑US sanctioned vendors) before primes fully reprice; conversely, a rapid diplomatic de‑escalation would snap back vols and hurt overlevered defense names priced for growth.