SpaceX shares extend slide as options traders and underwriters absorb IPO pressure

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SpaceX shares slide post-IPO

Highlights

SpaceX shares fell 5.5% on Friday to $122.12, extending a 10-day slide and trading 9% below the IPO price of $135.
$350 million in SpaceX options premium traded Friday, with $290 million tied to puts and seven of the 10 top contracts being puts.
Underwriters including Morgan Stanley and Goldman Sachs raised an additional $11 billion in SpaceX equity post-IPO as retail call buyers face losses.

Post-IPO selloff and derivatives positioning

As reported by CNBC, shares of the satellite and space exploration company fall 5.5% on Friday, extending a 10-day losing streak and touching $122.12, about 9% below the IPO price of $135. The stock is now down 44% from its intraday high of $225.64, while the Nasdaq-100, which is less than 1% below a record at SpaceX's high, is now 6% below that peak.

Trading in SpaceX options remains active but is cooling relative to the broader market. By late Friday morning, more than 500,000 contracts change hands, making it the 11th-most traded ticker, behind names and instruments including Micron, VIX, IWM and AAPL.

Of the $350 million in SpaceX options premium traded on Friday, $290 million is tied to puts, and seven of the 10 most-active contracts by volume are puts, according to SpotGamma data. One notable trade shows a cautious bearish stance, with a trader buying $2.6 million of same-day 140-strike puts while selling the same number of 135-strike puts, cutting the trade's cost by $1.6 million.

Investor losses and support levels

Retail traders who piled into SpaceX call options are now sitting on losses, and the pressure also extends to underwriters including Morgan Stanley and Goldman Sachs, which chose to raise an additional $11 billion in SpaceX equity after the company's strong market debut.

Don Kaufman, co-founder of TheoTrade and a former director at TD Ameritrade, says investors who feared missing the IPO now have ample opportunity to buy shares at lower levels. He also says he is surprised the lead banks are not selling more aggressively.

Even so, bullish conviction has not disappeared. More than half of total put premium is sold, and nine of the 10 most-active trades by volume are bullish, according to SpotGamma and Cboe LiveVol data. Kaufman says he is selling far out-of-the-money puts and would be willing to buy the stock at $100, a level that would still imply a valuation above $1 trillion.

In our earlier article, we analyzed the Nasdaq 100 sliding under short- and medium-term selling pressure as profitability concerns and rising costs weighed on earnings expectations for key constituents. The report highlighted bearish technical momentum with limited near-term rebound odds, while noting that longer-term support was still holding and that a clearer turnaround would likely require a sustained move back above major resistance.

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