economy
SpaceX options debut signals 'expensive' and 'dangerous' bets, strategist says
Options on SpaceX have started trading after the company's IPO, and they show a wide variation in bets.
TL;DR
- SpaceX's stock has risen about 50% from its IPO price, with its market cap exceeding Amazon's.
- Options trading suggests a 15% chance of a 50% stock increase and a similar chance of a 50% decrease in the next three months.
- The options activity suggests demand for further upward movement and concerns about lock-up supply, valuation risk, and fading initial enthusiasm.
- Strategists describe the options trading setup as 'difficult,' with tails being too expensive to buy and too dangerous to sell.
- Investors are currently 'trading the story,' 'the excitement,' and 'Elon Musk,' but fundamentals will eventually need to align with the valuation.
- The company's valuation is enormous, requiring significant growth over at least a couple of years to justify.