Space Exploration Technologies (SPCX), known as SpaceX, rose 24% shortly after trading began on its first day as a public company on Friday, with shares starting to trade at about 11:46 am EST. The flotation raised $75 billion and was around four times oversubscribed, following the sale of 555.5 million shares in Thursday’s IPO.
The stock was priced at $135, opened at $149.80 and later touched $168.75 just before noon. Elon Musk owns more than 533 million SpaceX shares and holds options for another 350 million at an $8.40 exercise price, which has led to his being described as a paper trillionaire. In parallel trading, the SPXC-USDC market on Hyperliquid saw a tokenised version of the stock changing hands in the $160s over the past 24 hours. Oppenheimer began coverage with an Outperform rating and set a $190 price target.
Managing High Volatility In Newly Listed SpaceX Options
Given the massive 24% first-day pop and heavy demand for SPCX, we are seeing extremely high implied volatility in the newly listed options. This means both call and put options are expensive, reflecting the market’s expectation of large price swings in the near future. We must factor these elevated premiums into any strategy we deploy over the coming weeks.
We see the strong upward momentum, backed by the oversubscribed offering and the $190 Oppenheimer price target, as a clear opportunity. A bullish approach involves buying call options or, to offset the high cost, using bull call spreads to target upside price action toward that analyst mark. This strategy bets that the initial investor enthusiasm will continue past the first few days of trading.
However, we must also be prepared for a potential pullback as early IPO investors take profits. Historically, highly anticipated IPOs like Rivian in 2021 saw a significant surge followed by a sharp correction within months. We are therefore considering purchasing puts as a hedge against our long positions or as a speculative bet that the initial hype will cool off by early July.
Neutral And Income Strategies Amid Blockbuster Debut
The sheer uncertainty and high volatility present a case for direction-neutral strategies. We can use long straddles, which involve buying both a call and a put option at the same strike price, to profit from a large price move in either direction. This is a pure volatility play, capitalizing on the predictable turbulence that follows a blockbuster market debut.
Finally, the inflated option premiums are themselves an opportunity for income generation. We believe the current implied volatility, which is sitting above 120% for near-term options, is likely to decrease after the initial excitement fades. Selling cash-secured puts or covered calls allows us to collect that rich premium, betting that the stock’s price will stabilize more quickly than the market currently anticipates.
