Latest / The Day Trading Podcast with Fexingo: Active Trading, Charts, and Short-Term Market Strategy / Day Trading the Post-SpaceX IPO Gamma Squeeze
Transcript
- Lucas: SpaceX is down roughly 30 percent from its first-day high, and the average retail buyer who got in at the IPO is sitting on a paper loss right now. But for day traders, that kind of post ipo slump creates a very specific options-driven setup — the gamma squeeze. Luna: We saw this pattern with a few of the big tech IPOs last year, but SpaceX is a different animal. The options chain is still thin, so any concentration of open interest can really move the stock. Lucas: Exactly. Let's look at the numbers. The stock listed around $210, spiked to nearly $300 on the first day, and now it's hovering near $190. What's interesting is the put open interest is heavily concentrated at the $180 and $190 strikes — about 40 percent of all put OI sits at those two levels. Luna: So market makers who sold those puts are now short gamma. If the stock drops toward $180, they have to delta-hedge by selling more shares, which accelerates the decline. That's the classic gamma trap on the downside. Lucas: Right. But the flip side is that if the stock holds above $190 and starts to bounce, those same market makers become long gamma. As the stock moves up, they need to buy shares to cover their delta hedge, which feeds into a squeeze. And we've already seen the VIX spike 13.8 percent in the last five days — broader volatility amplifies these moves. Luna: The VVIX is up too, though only about 0.8 percent. That suggests the volatility of volatility isn't screaming panic, but it's elevated enough that options premiums are juicy. For a day trader, that means you can get paid to wait for the squeeze. Lucas: Let's talk about the specific trade setup. You want to watch the $190 to $200 zone. If SpaceX can reclaim $200 with volume, the gamma flip probably kicks in and you'll see a rapid move back toward $220 or even $240. The key is the put-call ratio — it's currently around 1.8, which is heavily skewed to puts. Luna: That's a contrarian buy signal in a lot of quant frameworks. When everyone is piling into puts, the stock is often closer to a bounce than a breakdown. But you have to be careful with position size because the options spreads are wide. Lucas: Yeah, the bid-ask spreads on SpaceX options are still about 15 to 20 cents wide at the front month, which is not terrible for a new issue, but it means you can't scalp five-cent moves. You need a bigger move to make it worth your while. Luna: And that's where the macro context matters. We've got the Warsh Fed sounding more hawkish than the market expected. The ten-year Treasury yield has been creeping up, and that puts pressure on high-growth names like SpaceX. It's not just a stock-specific story. Lucas: Absolutely. The broader market is jittery — the S&P 500 is still near 7,500, but the Dow and the Russell 2000 are both down on the week. So any squeeze on SpaceX would have to overcome that macro headwind. That's why you want to see a catalyst — maybe a news event or a large options block trade. Luna: Speaking of catalysts, we saw a big block of call options trade at the $200 strike yesterday, about 5,000 contracts. That could be a hedge fund positioning for a bounce, or it could be a retail whale. Either way, it's a signal that someone thinks the downside is limited. Lucas: That's exactly the kind of footprint you want to see. When you combine concentrated put OI at $180 and $190 with a large call buyer at $200, you've got a potential gamma squeeze corridor. The stock gets pinched between the put wall below and the call buying above. Luna: Before we go deeper into the mechanics, I want to quickly mention something that keeps this show going — and it's not a sponsor, it's just you. A couple of dollars a month is what keeps these episodes ad-free and independent. If you've gotten anything out of our trading breakdowns, you can support us at buy me a coffee dot com slash fexingo. Lucas: Yeah, it really does make a difference. We don't run ads, we don't shill products, and that only works because some listeners chip in. So thank you to everyone who already does. Luna: Alright, back to SpaceX. So we've got this gamma squeeze setup — what's the entry strategy for a day trader? Lucas: I'd look for a dip into the $190 to $195 range with a bullish candlestick pattern — like a hammer or a bullish engulfing on the five-minute chart. Then buy the $200 call for the next weekly expiration, which is about 10 days out. The premium might be around $2.50 to $3.00, so you're risking a defined amount. Luna: And if the stock breaks below $180, you get out. That level is the put wall, and if it breaks, the gamma flips back to the downside and you could see a waterfall drop to $160 or lower. Lucas: Exactly. The risk management is non-negotiable. The average retail buyer who bought at $210 is already down almost 10 percent. Don't be that person. Use options to get leverage with a hard stop. Luna: One thing I'd add: the VIX at 16.78 is still relatively low historically, but the 13.8 percent spike in five days tells you volatility is picking up. So options prices are going to be more sensitive to gamma. That's actually good for this trade because the squeeze, if it happens, will be violent. Lucas: Great point. And the VVIX at 88.43 is not at panic levels, but it's above its 50-day average. That means the options market is pricing in a higher probability of large moves. So the setup is real, but it's not a sure thing. Luna: What about the short interest? Do we know how much of SpaceX is short? Lucas: We don't have reliable short interest data yet because it's only been trading for a couple of weeks. But the options activity suggests there's a lot of put selling, which is synthetic short exposure. That's why the gamma squeeze is more relevant than a traditional short squeeze here. Luna: So you're really playing the options market makers' hedging, not the shorts covering. That's a subtle but important distinction. Lucas: Exactly. A short squeeze is about short sellers buying to cover. A gamma squeeze is about market makers buying stock to delta-hedge their options positions. They're forced buyers, which creates a self-reinforcing cycle. Luna: And that cycle can happen quickly — sometimes in a single trading session. If you're day trading this, you want to be in the trade before the gamma flip, not after. Lucas: Right. So watch the first 30 minutes of trading. If SpaceX opens weak but holds $190, that's a sign of support. If it opens strong above $200, the squeeze might already be underway, and you might be better off waiting for a pullback. Luna: One more thing: the overall market correlation. SpaceX is still moving somewhat with the NASDAQ, which is down about half a percent on the week. So a broad market rally could be the catalyst that triggers the squeeze. Lucas: Good observation. If the Fed sounds less hawkish in a speech or the jobs data comes in soft, that could lift the whole tech sector and SpaceX along with it. But that's a macro bet on top of the options setup. For pure day traders, the technicals and the options flow are enough. Luna: Alright, so to recap: watch the $190 to $200 zone, look for a bullish candlestick pattern on the five-minute chart, buy the weekly $200 call if the stock holds above $190, and cut the trade if it breaks $180. Lucas: That's the plan. And remember, this is a high-probability setup, not a guarantee. Trade small, manage risk, and don't get emotionally attached to Elon's company. Luna: Speaking of which, it's Friday, June 20, 2026. We'll see how the gamma plays out next week. Thanks for listening.