SpaceX options surge as traders price 50% swing odds

About 1.8 million SpaceX options contracts changed hands on Tuesday, the day after the company’s Nasdaq debut. Call contracts outnumbered puts as traders priced significant chances of large moves in either direction.

SpaceX priced its IPO at $135 a share last week. The stock has risen roughly 50% since the listing, briefly lifting the company’s market value past Amazon and above Microsoft during Tuesday’s session.

An option gives the holder the right, but not the obligation, to buy or sell a stock at a set price before a specified date. Calls gain value when the underlying stock rises; puts gain value when the stock falls or are used as protection. Rapid price moves pushed implied volatility higher, raising option premiums across strikes and expirations.

Market pricing implied about a 15% probability that the stock could rise 50% over the next three months and a similar probability of a 50% decline, a measure traders use to express the chance of extreme outcomes on either side.

The 1.8 million contracts exceeded the previous first-day record for a newly listed company’s options market. Data showed SpaceX options were among the most heavily traded single-stock contracts that day, behind a small number of other large-cap names. Call volume ranked in the top five for the session.

Some large trades appeared structured as downside hedges. One notable position aimed to protect holdings if the stock fell below $205 in September, a level traders linked to potential share supply changes when IPO lock-up periods ease.

Market strategists highlighted the rare speed of activity after an initial public offering. Mike Khouw, chief strategist at YieldMax ETFs, called the rapid start of options trading “unusual in history.” Chris Murphy, a strategist at Susquehanna, said the options market presented a dilemma for traders, describing the tails as “too expensive to buy” and “too dangerous to sell.”

Investors pointed to several company-specific drivers for the surge in interest: regular rocket launches, the Starlink satellite internet business, defense contracts, stated artificial intelligence ambitions and the public profile of CEO Elon Musk. Some retail and institutional investors who received small IPO allocations or missed the offering used options to gain exposure or hedge existing positions.

Concerns about high valuation and the effect of future share supply contributed to demand for protection. Short seller Jim Chanos observed that stocks priced at high multiples of revenue leave little margin for error, while acknowledging that Starlink represents a real business.

Options strategists noted that elevated implied volatility made both buying protection and selling premium costly. That combination left the market active but cautious, with prices reflecting the possibility of large price swings but no clear consensus on direction.