The value of SpaceX has dropped by more than $1.2 trillion since hitting a high of $225.64 in June—a sum nearly equal to the entire market cap of Elon Musk's other company, Tesla Motors (TSLA), whose shares have just fallen to their lowest point in nearly a year.
On Monday, SpaceX declined for the 13th time in the last 16 trading sessions, falling over 1% to close at $113.50. While some option flows are balancing between bullish and bearish positions, Monday's largest single options trade in SpaceX was generally neutral to positive in direction.
Small speculative traders are still heavily buying "almost impossible" call options—these require the sharply declining stock to rapidly reverse and double in value to become profitable. In terms of volume, put options trading exceeded calls on Monday—traders bought 106,000 call contracts compared to 77,000 put contracts, though the majority of the $442 million in premium was tied to puts.
The highest volume contract was the $330 strike call option expiring on Friday, which traded at just $0.10 and has about a one-in-three probability of success, according to ThinkOrSwim data. Data from CBOE LiveVol shows that four of the five largest premium trades were neutral or bullish in direction.
These include two massive put spread sales—one involving a multi-million dollar in-the-money put spread sale that requires a SpaceX rebound to profit; another where a trader sold 5,200 contracts of the $100 strike put option expiring October 16, while buying 7,000 contracts of the $85 strike put with the same expiry, netting $1.8 million in premium.
"As an investor, it's too early; as a trader, Wall Street is currently punishing AI stocks for capital expenditure," said Charles Moon, a technology and momentum strategy expert at Prosper Trading Academy in Chicago.
One thing is certain: SpaceX is providing traders with one of the wildest roller coasters in the market. While earnings reports typically reduce volatility, next week's results may not follow that pattern.
SpaceX's first-ever earnings report since going public will pave the way for unlocking 20% of the qualified lock-up shares—up to 911.5 million shares could become available for sale on the second full trading day after the earnings release, which is August 6.
"I don't think the SpaceX lock-up expiration will be as bad as everyone fears," Moon said. "But it won't be good for the stock price either."
Comments