Latest / The Day Trading Podcast with Fexingo: Active Trading, Charts, and Short-Term Market Strategy / How Day Traders Read the SpaceX Post-IPO Option Flow
Transcript
- Lucas: SpaceX just wrapped its first full week as a public company, and if you were watching the option flow rather than just the stock price, you saw something pretty telling. Luna: Yeah, the stock popped, then slid. But the options market was sending signals before that slide really got going. Lucas: Exactly. So let's talk about what day traders are actually tracking in the SpaceX options chain right now. The stock opened around $172, hit $185 intraday on day one, then closed the week near $158. That's a 15% round-trip for anyone who bought the open. Luna: Right. And if today was useful to you — if you're thinking about how to read that flow — the way this stays ad-free is listener support. That's buy me a coffee dot com slash fexingo. Lucas: Yeah, and we really mean that. People who find value in the show, that's how it keeps going. No ads, just that. Luna: So back to the flow — what were you seeing in the put activity specifically? Lucas: So on day one, the $170 put had huge volume. Over 12,000 contracts traded. That's enormous for a single-stock option on its first day. And the open interest at the end of the week — the $150 put had over 8,000 contracts. The $160 put had about 6,500. That's a lot of positioning for a stock that only has a float of about 100 million shares. Luna: So dealers who sold those puts are now hedging by shorting the stock or buying puts themselves. That's the dealer delta dynamic. Lucas: Exactly. And that's the key for day traders. When the stock was at $172, the dealer gamma was positive — they were buying dips. But as it fell through $160, that flipped. Now the dealer delta is negative around $150 to $155, meaning if the stock drops further, dealers have to sell more. That's the gamma pinch. Luna: So the put open interest concentration at $150 acts like a magnetic floor, but if it breaks, the selling accelerates. Lucas: Right. And that's exactly what happened Thursday and Friday. The stock bounced off $150 twice, but the vol — the VIX was at 16.78, and the VVIX, which is the vol of vol, dropped 5.7% on the week to 88.43. That tells you the market expects less tail risk, not more. So the put premium is actually compressing. Luna: Interesting. So the VVIX term structure is flattening. That's not typical for a stock that just fell 15% in a week. Lucas: It's not. And that's the tell. If traders expected a crash, VVIX would be spiking. Instead, it's falling. So the option market is saying this is a normal post ipo consolidation, not a disaster. But the dealer gamma is still negative near $150, so short-term scalpers are watching that level like a hawk. Luna: So what's the actual play here for a day trader? Are you buying puts, selling puts, or just watching the gamma pin? Lucas: I think the cleanest trade is a put credit spread. Sell the $150 put, buy the $145 put. You collect premium, and if the stock holds $150, you keep it. If it breaks, your max loss is limited. The risk is if SpaceX gaps down on some news — like the Iran peace talks going sour or a Fed hawkish surprise. Luna: Right, and speaking of the Fed, Kevin Warsh gave a speech on Friday that basically said 'regime change but in a velvet glove.' He's signaling a slower pace of cuts. Lucas: Yeah, and that's a macro headwind for high-beta names like SpaceX. But the options market is already pricing that in — the VIX is only 16.78. That's not panic. So the vol is low enough that the put credit spread makes sense. Luna: What about the call side? Are there any upside plays? Lucas: The call open interest is very thin above $180. Only about 2,000 contracts at the $180 strike. So there's no gamma squeeze setup on the upside unless volume picks up. But if the stock holds $150 for another week and shorts get nervous, you could see a sudden rally. That's more of a speculative bet. Luna: So the options flow is telling you the market expects range-bound trading between $150 and $170 for now. Lucas: Exactly. And the VVIX drop confirms it — low vol of vol means traders aren't pricing big swings. So day traders should be selling premium, not buying it. That's the theme of the week. Luna: Alright, so to wrap: watch the $150 put open interest. If it breaks, dealer hedging could drive it to $140. If it holds, range trade. And keep an eye on the VVIX — if it starts rising, that's the signal that something's changed. Lucas: Perfect summary. And as always, size your risk accordingly. One bad gap can wipe a week of premium selling.