SpaceX (SPCX) was essentially hyped up as the IPO to end all IPOs. With OpenAI pushing its public debut back to 2027 and uncertainty swirling around how sustainable AI spending will be, it may very well be.
Just 25 days into its trading life, and SpaceX has become incredibly boring.
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If you look at its chart, the stock price has suddenly started to practically resemble bonds… OK, maybe not that boring. But with the stock trading in a 12% range from top to bottom since two weeks ago, the question has to be asked: Is SPCX going to stay this calm?
www.barchart.com Or, to put it another way, has the stock market finally honed in on this aspirational company as a $2 trillion venture, not a $3 trillion venture, as it was briefly, shortly after it debuted on June 12? While the first earnings report and the end of a key lockup period for some insiders are just a bit down the road, I wanted to see if my interest in SPCX as an optionable play was still filled with intrigue. As reported here last month, it was initially, but a one-day, 15% plunge in the stock “cleaned me out” in a good way.
All that remains of my current SPCX exposure is a tiny position in $120 strike puts expiring on 7/24/26. How small? Small enough to forget it is there. Unless of course, the stock dives toward its $135 IPO price. Which I’d suspect is at least a “jump ball” situation between now and year-end. That is, around a 50% chance of happening.
While I would not call SPCX collar pricing “ideal” at this point, I will say I’m pleasantly surprised at what is out there, if you’re willing to accept more risk. Here’s what I set out to find: a collar that would go out to January of next year (2027), which allows for at least two earnings reports. And, with downside risk net of cost to get me to around that $135 IPO level.
Here’s one sample scenario I came up with.
www.barchart.com Lots of upside there for sure, 45%, all the way up to $255. And striking the puts at $155 to that same expiration date nets the cost to $22. So that’s a $133 net, and subtracting that same net cost from the upside results in a cap of $233 a share. As we see toward the right, that translates to a 45%/-17% up/down ratio. More than 2.5:1. Not bad.
This is more a status check. The number I’ll be watching going forward is the Implied Volatility. Shown here, it is down to 85%.
www.barchart.com The data is still populating here since the stock is still new. But we can see it is toward the bottom of its range so far, having flown to 111% shortly after the IPO date.
The bottom line to me is that if there’s option liquidity, you go out far enough in time, and you are willing to take some downside (but cap it where you choose), any volatile stock is a collar consideration. For SPCX, all of that is in place.
In a market that continues to be an epic bulls vs. bears battle on a daily basis, that’s a nice weapon to add to your arsenal. In the case of this stock, this lull in the excitement likely won’t last long.
Rob Isbitts is a semi-retired CIO, former fiduciary investment advisor, and Barchart columnist. Check out his other work at ETFYourself.com (featuring the Fresh Charts weekly trading post), and ROAR.PiTrade.com, helping investors to better-manage their own portfolios.
On the date of publication, Rob Isbitts had a position in: SPCX . All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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