With the war in the Middle East, keep an eye on defense stocks.

Today, for example, shares of Northrop Grumman (NOC) gapped from about $420 to $470.04. L3Harris (LHX) gapped from about $160 to $179.85. Lockheed Martin (LMT) jumped from about $300 to $434.65. General Dynamics (GD) even jumped from $ 215 to $237.60.

However, a short-lived fight could force those stocks lower. In fact, investors may want to consider shorting or buying put options on the names mentioned at some point.

Granted, “The prospect that fighting in Gaza would spark a regional conflagration is always a danger. But the way such conflicts have been contained previously suggests the risk is well understood. The US Navy deploying a carrier strike group to the eastern Mediterranean is intended to signal against wider escalation.”

While it’s a wait-and-see situation, we wouldn’t chase defense stocks here.