Latest / The Day Trading Podcast with Fexingo: Active Trading, Charts, and Short-Term Market Strategy / How Day Traders Are Using the SpaceX Post-IPO Gamma Pin
Transcript
- Lucas: So SpaceX has been public for just over a week now, and the stock has been a magnet for day traders — but not for the reasons most people think. Luna: Right, everyone's focused on the IPO pop and then the slide. But I've been watching the options chain, and something's happening around that $180 strike. Lucas: Exactly. That $180 level is acting like a gamma pin. For anyone who hasn't seen this before, gamma pin is when a large open interest at a particular strike price pulls the stock toward that level as options expiration approaches, because market makers delta-hedge their positions. Luna: And in SpaceX's case, the weekly options that expired last Friday had massive open interest at the $180 strike — over 30,000 contracts on the put side alone. Lucas: Right. So what happened? The stock opened the week near $210 after the first-day surge to $220. It dropped hard on Tuesday and Wednesday after the news that the average buyer was almost under water. By Thursday morning it was testing $185. Luna: And that's when the gamma kicked in. The stock bounced exactly off $180 on Thursday and Friday, multiple times. Lucas: It was textbook. The pin pulled it back every time it tried to break lower. So as a day trader, you had a clean setup: buy the $180 put when the stock was at $196, targeting a reversion to $182, then flip to a call when it bounced. That's two trades in one session. Luna: And the risk was defined. The put cost about $2.50 at the time, so max loss was $250 per contract. If the pin held, you made money on the put as the stock dropped, then on the call as it recovered. Lucas: Now, the broader market context matters here. The VIX is at 16.78, up 3.6% over the past week, and the Russell 2000 is down almost 1%. That's a risk-off backdrop. When the market is skittish, single-stock gamma pins become more reliable because there's less overall buying pressure to overwhelm the hedging flows. Luna: So you're saying the macro environment actually helps the pin hold? That's counterintuitive — you'd think fear would blow through it. Lucas: You'd think, but in practice, when the market is cautious, options market makers are more aggressive about staying delta-neutral. They don't want to take directional risk on a new, volatile IPO. So they hedge more precisely, which reinforces the pin. Luna: Makes sense. And this week, SpaceX stock opened Monday around $192, then drifted back to $185 by Tuesday. Lucas: Right. So the $180 pin is still in play for this Friday's expiration. Open interest at that strike is still north of 20,000 contracts. If the stock gets near $185 again tomorrow, I'd look for the same pattern. Luna: What's your specific setup? Walk us through it. Lucas: Sure. If SpaceX opens above $190, I'm waiting. But if it gaps down to $185 or lower, I'll buy the $180 put expiring this Friday. I want to see the stock drift toward $182-183 intraday, then take profit on the put and buy the $180 call for the bounce back to $185-188. Luna: And if it breaks $180? Lucas: Then the pin is broken. I'd cut losses on the call and potentially look for a short on the break, targeting the next support around $170. But given the open interest, I think the pin holds at least through Thursday. Luna: One thing to watch — the overall options volume on SpaceX has been dropping. First week, we saw 200,000 contracts a day. Now it's more like 100,000. That could reduce the pin's strength. Lucas: That's a good point. Lower volume means less hedging pressure. But the open interest at $180 is still concentrated. As long as that stays, the pin should hold. You just need to be nimble — don't hold overnight if you're in the trade. Luna: Honestly, if this episode helped you think about one new setup, that's worth a coffee. You can find us at buy me a coffee dot com slash fexingo. It keeps the show ad-free and independent. Lucas: Yeah, listener support is what lets us keep digging into these specific mechanics. No pressure, but if it's useful, that link is there. Luna: Alright, back to the pin. So tomorrow morning, if SpaceX is near $185, you're watching that $180 strike. Lucas: Exactly. And if you're trading this, keep your position size small. A week-old IPO can gap on any headline — the CEO could tweet something and the pin breaks instantly. Risk management first. Luna: Good reminder. The gamma pin is a probabilistic edge, not a guarantee. Use it as part of a broader plan. Lucas: Right. And if you're not trading SpaceX, look for similar setups in other recent high-volatility names. The same mechanics apply whenever there's a massive open interest cluster. Luna: Speaking of which — we should do an episode on how to scan for gamma pins using open interest data. That would be useful. Lucas: Noted. For now, keep your charts tight and your stops tighter. We'll see you tomorrow.