Elon Musk's wealth roller coaster: SpaceX has halved from its peak, while Tesla simultaneously hits a new low for the year
SpaceX's market value has evaporated by over $1.2 trillion from its peak, with the stock price dropping to $113.50; Tesla has also hit a new low for the year. Despite a large volume of bearish options trading, some large transactions are neutral or slightly bullish, indicating market divergence
Since reaching a high of $225.64 in June, SpaceX has seen its market value evaporate by over $1.2 trillion—which is almost equivalent to the entire market value of Musk's other company, Tesla, whose stock price has just fallen to a nearly one-year low. On Monday, SpaceX fell for the 13th time in the past 16 trading days, dropping more than 1% to close at $113.50.
Although some options flow is tending towards balance between bulls and bears, the largest single options trade for SpaceX on Monday was overall neutral to slightly bullish. Small speculators are still buying large amounts of "almost impossible" call options—these options require the plummeting stock to quickly reverse and double in order to profit.
In terms of volume, on Monday, the trading volume of put options exceeded that of call options—traders bought 106,000 call options compared to 77,000 put options, although most of the $442 million in premiums were related to put options. The most traded contract was a call option with a strike price of 330 expiring on Friday, priced at only $0.10, with a success probability of about one-third, according to ThinkOrSwim data.
According to LiveVol data from the Chicago Board Options Exchange, four out of the five largest trades in premiums were neutral or slightly bullish. This includes two large sell trades of put option spreads—one of which was a multi-million dollar in-the-money put option spread sell that requires SpaceX to rebound to profit; the other involved a trader selling 5,200 put options with a strike price of 100 expiring on October 16 while buying 7,000 put options with a strike price of 85 expiring on the same date, netting $1.8 million in premiums.
"As an investor, it is still too early; as a trader, Wall Street is currently punishing AI stocks due to capital expenditures," said Charles Moon, a technology and momentum strategy expert at Chicago's Prosper Trading Academy.
One thing is certain: SpaceX is providing traders with one of the wildest roller coasters in the market. While earnings reports are typically events that reduce volatility, this may not be the case after next week's earnings announcement SpaceX's first financial report since going public will pave the way for investors to unlock 20% of eligible lock-up period shares—up to 911.5 million shares will be available for sale on the second full trading day after the report is released (i.e., August 6).
"I don't think the lock-up period release for SpaceX will be as bad as everyone is worried about," Moon said. "But it won't be a positive for the stock price either."
