Options on SpaceX shares are poised to hit the market this week, with the exchange Cboe Global Markets saying a spokesperson expects listings to begin as soon as Tuesday. The arrival of options follows a dramatic opening for the company's shares on Friday, when SpaceX's stock surged more than 25% from its IPO price and moved the company's market value above $2 trillion.
Analysts and traders anticipate heavy and potentially expensive activity in the new contracts. Options provide rights to buy or sell shares at predetermined prices within set timeframes and are frequently used both to gain cost-efficient exposure and to express views on short-term price moves. They also serve as a tool for existing shareholders seeking downside protection.
"I expect explosive demand," said Ophir Gottlieb, chief executive of Capital Market Laboratories. Gottlieb pointed to the combination of an outsized initial public offering and a polarizing founder as elements likely to drive substantial option-dollar volumes when SpaceX options begin trading.
Trading backdrop
SpaceX opened at $150 on Friday, above its $135 IPO price, and was trading near $172 in afternoon activity. That price action placed SpaceX among the largest U.S. companies by market capitalization, making it the sixth-largest U.S. company at a valuation exceeding $2 trillion. The rapid price move on debut is expected to be a catalyst for brisk options demand as market participants react to the new equity’s price discovery process.
Skeptics and bearish investors are likely to use options to express negative views on the stock without taking on the open-ended risks of shorting shares directly. "With a short, your risk is theoretically unlimited, your borrow costs can be punishing, and in a thin float like SPCX’s, a short squeeze can wipe you out before you’re ever proven right on the fundamentals," said Luke Lango, chief technology analyst at InvestorPlace.
Volatility expectations
Market participants expect SpaceX’s listed options to carry elevated implied volatility at launch, in part because of comparisons to Elon Musk’s electric vehicle company, which has historically exhibited above-average volatility. Tesla’s five-year beta stands at 1.81 per LSEG data, where a reading of 1 indicates volatility in line with the market. "I think we’re going to see a lot of volatility in the underlying stock," said Seth Hickle, chief investment officer at Mindset Wealth Management, adding that implied volatility in options could be "very high."
Higher implied volatility generally translates into more expensive option premiums, which affects both hedgers buying protection and speculators seeking to trade directional moves or volatility itself.
Events that could concentrate activity
Traders expect option volumes to concentrate around certain milestones, including SpaceX’s first quarterly report as a publicly traded company and any developments related to inclusion in major equity indexes. Nasdaq has already modified its rules to ease SpaceX’s entry into the Nasdaq 100. MSCI said it will apply early inclusion rules for large IPOs, while S&P Global has ruled out fast-track inclusion into the broad-market S&P 500. Such events often prompt repositioning by index funds, active managers, and liquidity providers and can amplify demand for options tied to the underlying stock.
Chris Murphy, co-head of derivatives strategy at Susquehanna, noted the unusual level of market curiosity around the timing of option listings. "We have been asked the question, 'What day will the options be listed?' more times than any IPO I can remember," he said.
Who is likely to participate
Expect a broad mix of participants when trading begins: shareholders looking to hedge downside risk, traders speculating on near-term price swings, and volatility-focused market makers and funds. The structure of options allows different investor types to target distinct objectives, from income strategies to outright directional bets or volatility plays.
Market participants also caution that, in a company with a relatively small free float, traditional short selling carries additional hazards, which may push more investors toward structures such as put options to express bearish convictions.
As SpaceX moves through its early days as a public company, options will provide another mechanism for price discovery and risk transfer. The initial weeks of trading in those contracts are likely to reveal how different investor groups choose to use derivatives tied to one of the market’s largest and most closely watched new listings.