SpaceX stock has jumped nearly 50 per cent from its lows, with Monday's rally pushing the shares above the level of their June debut. The run has made CEO Elon Musk a trillionaire again, according to the report.
Options trading was heavy: 1.7 million contracts worth $900 million exchanged hands, with more than 1 million of those being bullish calls valued at over $640 million. Despite the optimism, implied volatility has fallen significantly. At the stock's June debut, implied volatility was above 110; it now sits at 55, up from a record low below 50 on Thursday.
Market-makers assign less than a 50 per cent probability that SpaceX will touch $225 by July, according to options pricing. For the near term, there is a 54 per cent chance the stock reaches $185 by the end of the month. Notably, implied volatilities for put options are roughly equal to those for calls, suggesting downside swings are as likely as upside surges. This contrasts with stocks like Nvidia, where call premiums are typically higher.
Charles Moon, a technical and momentum trader at Prosper Trading Academy in Chicago, said: "Starship has helped out but it seems like Wall Street is piling in starting Q4. SpaceX and Tesla are feeding off each other. They're moving more in sync lately." The 30-day correlation between SpaceX and Tesla is currently 0.66.
Morgan Stanley analyst Adam Jonas, who reiterated a $300 price target, wrote that "adjusted for growth, SpaceX is one of the cheaper ways to play the strong optionality of the Space and Intelligence Economy."