SpaceX options debut with tails looking `dangerous,’ strategist says

SpaceX saw a 15% chance on its first day of trading for the stock to increase by 50% or decrease by half in the next three months, as reported by Susquehanna.

The stock had the fifth-highest call volume of the day, according to Susquehanna strategist Chris Murphy.

“The largest trades seemed to be hedging against future supply risk,” Murphy noted. “Upside calls indicate a demand for further upward movement, while downside puts express concerns about lock-up supply, valuation risk, and the potential waning of initial post-listing excitement. This creates a challenging trading environment. The extremes seem too costly to buy, yet too risky to sell.”

Since its IPO, SpaceX’s stock has continued to rise, now up by approximately 50% from its initial offering price, with a market cap surpassing Amazon and nearing that of Microsoft. The options trading reflects a lively debate on whether the company can sustain the initial hype.

Current pricing suggests a 15% probability of SpaceX increasing by another 50% by September, while also indicating a 13% chance of a 50% decline, according to Murphy.

Investors are navigating the narrative, excitement, and Elon Musk factor, but the company’s fundamentals must eventually align with the enthusiasm, noted Peter Boockvar, chief investment officer at One Point BFG Wealth Partners, on CNBC’s “Squawk Box Asia.”

“If they can deliver, the potential for growth is substantial, but the valuation is so high that the company must demonstrate significant progress to justify it,” he added. “This will likely take a couple of years.”