SpaceX options are reflecting a market divided, with current pricing indicating a 15% chance of a 50% stock surge and a similar probability of a 50% drop by September. This volatility underscores the intense scrutiny on the company’s ability to meet lofty expectations post-IPO.
Strategists warn that both buying and selling these options carry significant risk due to the ‘expensive’ upside and ‘dangerous’ downside. Investors are betting on the Elon Musk-led narrative, but the fundamental performance of SpaceX will ultimately determine if it can justify its massive valuation.
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The nascent trading of SpaceX options is signaling a market split, with significant probabilities assigned to both explosive growth and substantial decline. According to Susquehanna, current option pricing suggests approximately a 15% chance that SpaceX's stock could surge another 50% by September, while a nearly identical 13% probability exists for a 50% drop in the same timeframe. This precarious balancing act highlights the intense investor debate surrounding the space exploration giant's ability to justify its sky-high valuation.
On its first day of trading, SpaceX options saw considerable activity, with call volume ranking fifth highest for the day, as noted by Susquehanna strategist Chris Murphy. Murphy's analysis suggests that many of the largest trades are acting as hedges against future supply risks. The demand for upside calls reflects optimism for continued upward momentum, whereas the concern driving downside puts stems from potential lock-up expirations, valuation anxieties, and the possibility that the initial post-listing euphoria will wane.
“The tails look too expensive to buy, but they also look too dangerous to sell,” Murphy stated in a note, encapsulating the challenging trading environment. The stock itself has continued its upward trajectory since its initial public offering, climbing about 50% from its IPO price and boasting a market capitalization that has eclipsed Amazon's and is nearing Microsoft's.
Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, commented on CNBC's "Squawk Box Asia" that investors are currently "trading the story, they're trading the action, they're trading the excitement, they're trading Elon Musk." However, he stressed the inevitable need for fundamentals to catch up with the narrative. "If they can deliver, then the upside is certainly there, but the valuation is so enormous that the company is going to really have to show itself in growing into that valuation," Boockvar added, suggesting this process could take a couple of years.
SpaceX IPO at the Nasdaq on June 12th, 2026. (Image Credit: Adam Jeffery | CNBC)
