SpaceX Reclaims its Debut Close, but Options Are Pricing a Slow Grind Ahead

Space Exploration Technologies Corp. (NASDAQ:SPCX) is back above its first-day close, but the options market suggests traders shouldn’t expect a quick run back to the stock’s June highs.

SpaceX shares rose 0.49% Tuesday, on top of Monday’s roughly 8% gain to $171.09, to mark their highest close since mid-June. The stock is up nearly 50% from its early-August low, per Benzinga Pro market data, and is well above its IPO price. 

Catalysts Stack Up

Morgan Stanley analyst Adam Jonas reiterated an Overweight rating and a $300 price target in a Sunday note. 

“Adjusted for growth, SpaceX is one of the cheaper ways to play the strong optionality of the Space and Intelligence Economy,” he wrote. Jonas pointed to Starship Flight 15, expected in late October or early November. He said a ship catch “could be the biggest positive catalyst since the IPO.”

Third-quarter earnings are also due late this month. Last Thursday, a Falcon 9 carried four astronauts to the International Space Station in under eight hours, a new record. The rally also put CEO Elon Musk‘s net worth back at $1.03 trillion, according to Forbes.

Call Buyers Pile In

SpaceX options volume ran at twice the 30-day average Monday, CNBC said. About 1.7 million contracts worth roughly $900 million changed hands. Calls made up 1 million of them, worth more than $640 million. 

Cboe LiveVol data show traders likely bought 456,000 calls and fewer than 240,000 puts. They likely sold 250,000 puts and 295,000 calls, according to CNBC. 

Volatility Tells a Different Story

Back in June, SpaceX took less than three sessions to go from $171 to an intraday high above $225, with implied volatility over 110. After seven weeks of trading within a 10% range, IV was near 55 Monday, up from an all-time low below 50 last Thursday.

Lower implied volatility means traders expect smaller, slower moves. Options pricing at Monday’s close put the odds of SpaceX touching $225 at any point before July below 50%. Shorter-dated contracts gave it a 54% chance of reaching $185 by the end of October, according to data cited by CNBC.

Skew is also flashing caution as SpaceX puts carry implied volatilities equal to or higher than calls, so traders are pricing a sharp drop as about as likely as a big rally. 

NVIDIA Corp. (NASDAQ:NVDA) shows the reverse. Calls there cost more in many expirations, a sign its investors worry more about missing a rally than about a sell-off.

Unless SpaceX picks up speed again, a return to record highs looks like a longer haul.

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