Key Takeaways:
More than half a million SpaceX options contracts changed hands in the first hour of trading Tuesday, the heaviest first-day volume for any company in history.
SpaceX options began trading Tuesday with more than 675,000 contracts changing hands by 10:40 a.m. in New York, the heaviest first-day volume for any company on record, according to Trade Alert data. The stock rose 4.83% to $201.80, extending its rally from last week's record-breaking initial public offering.
"Early option volume indicates another SpaceX success," said Seth Hickle, chief investment officer at Mindset Wealth Management.
Calls outnumbered puts 1.5-to-1, with SpaceX ranking as the second-most actively traded single-stock options behind Tesla, Trade Alert data showed. The options listing gives investors a low-cost way to gain exposure to Elon Musk's rocket and spacecraft manufacturer, which has already surpassed a $2.5 trillion market value after surging more than 42% above its $135 IPO price.
"It's really kind of going nuts," said Brent Kochuba, founder of options analytic service SpotGamma.
Implied volatility stood at about 115%, meaning the stock is priced to move 7.2% in either direction each day. The elevated premium reflects extraordinary demand for call options, which increase in value when shares advance. Chris Murphy, co-head of derivatives strategy at Susquehanna, said investors continue to chase upside in high-beta artificial intelligence and space-linked winners.
Options Frenzy Meets Record Retail Demand
The options debut follows a historic first week of trading that saw SpaceX add more than $800 billion in market value. Retail traders bought as much SpaceX stock over the first two days of trading as they did across the entire U.S. stock market the prior week, according to Vanda Research data. The IPO raised $75 billion at a $1.77 trillion valuation, making founder Elon Musk the world's first trillionaire.
SpaceX's options volume on its first day exceeded every other company's first-day options trading on record, Trade Alert data showed. On any given day, about 61 million options contracts trade across all U.S. exchanges. SpaceX is expected to join Apple, Meta Platforms, Nvidia and other large technology stocks that dominate options activity, and the stock is likely to be included in exchange-traded funds that use options to magnify daily price moves.
The U.S. 10-year Treasury yield edged lower Tuesday as the Federal Reserve's two-day policy meeting began, with markets pricing in a hold at the current 5.25% to 5.50% range. The S&P 500 rose 0.3% as the broader market absorbed the SpaceX options launch alongside the Fed decision and a U.S.-Iran agreement to reopen the Strait of Hormuz.
Investors are now watching for potential selling pressure when lockup agreements expire in the coming months, allowing early investors and employees to sell shares. "What I think is going to be interesting is when that booster rocket of retail demand falls off," said Max Gokhman, senior vice president at Franklin Templeton Investment Solutions.
This article is for informational purposes only and does not constitute investment advice.
