Honeywell Aerospace heads into the final stretch of September with a striking divergence: short interest rising fast while options traders are as bullish as they've been all year.
The most eye-catching tension in the data is that short sellers rebuilt their positions aggressively in the second half of this week — up 33% in a single session on September 21 — yet the stock closed at $169.03, adding 3% on the week. Call buying, not hedging, is driving options flow. Together, those two facts raise a straightforward question: which side reads the tape correctly?
Short interest has jumped 54% week-on-week, climbing from roughly 4.6 million shares to just over 7 million. That follows a multi-week run of covering that took shorts from above 9 million shares in mid-August down to a trough in mid-September. The rebuild, while sharp, leaves positioning well short of August's highs. Importantly, the borrow market tells a relaxed story: availability is vast, with roughly 177 million shares still available to lend and availability at 1,776%, far from anything that would stress a short seller trying to establish or hold a position. Cost to borrow is 0.41%, having eased about 13% on the week. Nothing in the lending market signals crowding or squeeze pressure. The ORTEX short score has nudged up to 32.2 from around 29.4 a week ago, consistent with the rebuilding, but sits well below anything that would flag an extreme.
Options positioning flatly contradicts the short rebuild. The put/call ratio has dropped to 0.28 — the lowest it has been in months and well below the 20-day average of 0.38. The 52-week low on the PCR is 0.00, so the current reading is at the call-dominated end of the spectrum without being historically extreme. What is notable is the directionality: through August, when the stock was down sharply after earnings, the PCR ran between 0.69 and 0.91. It has compressed consistently since late August as the stock recovered, suggesting options traders have rotated from defensive hedging to outright call exposure. The z-score of -0.47 is not extreme, but the trend is clear.
The Street's stance is broadly constructive but has been shaped by a rough earnings print. The stock fell nearly 28% on August 5 after reporting, prompting a cluster of target cuts in early August — BMO trimmed from $276 to $209, RBC from $300 to $250, BNP Paribas from $245 to $210, and UBS from $231 to $213 — all while maintaining positive or neutral ratings. Since then the recovery trade has found some traction. Morgan Stanley upgraded to Overweight in August, keeping its $205 target. Susquehanna initiated with a Positive rating and a $190 target on September 17. The consensus now sits at buy with a mean price target of $209.50, representing about 24% upside from current levels. At a trailing PE of 19.2x and EV/EBITDA of 10.5x, the stock has de-rated meaningfully from where analysts were initiating coverage in July with $250-$255 targets. On the more bullish side, RBC's maintained Outperform with a $250 target implies the Street still has a wide range of views on how fast the margin recovery materialises.
Director Craig Arnold's open-market purchase of 6,400 shares at $156 on September 1 — just weeks after the post-earnings selloff — adds a modest signal of insider confidence. It is a small absolute size at roughly $1 million, but it is a clean code-P discretionary buy, not a compensation mechanism, and it came at prices well below the current level. No other meaningful open-market activity has followed in the EDGAR filings.
Earnings are next scheduled for November 6. The history here is sobering: the August print delivered a one-day decline of nearly 28% and a five-day loss of 22%, a magnitude that reset analyst targets across the board and accounts for most of the year's underperformance. The question heading into November is whether the aerospace recovery cycle has enough tangible momentum to shift the narrative, or whether the rebuilt short position reflects scepticism that the Q3 numbers can hold the margin trajectory analysts now expect.
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