Traders expect SpaceX shares to rise after the company reports earnings after the bell Tuesday. The results will be SpaceX's second earnings report. Cboe LiveVol data show options market-makers are pricing about a 6% swing after the results. The expected swing is less than half the 13% decline after SpaceX's inaugural report in August. That selloff marked the low for the shares. SpaceX shares rallied 60% over the following two months before reversing and falling as much as 19% over the past two weeks.
SpaceX delivered four astronauts to the International Space Station in record time during a busy three months. SpaceX also expanded the company's mobile network spectrum. SpaceX is reportedly considering a $40 billion debt deal to buy Nvidia chips. CEO Elon Musk said Musk plans to give shares to every child in America next year. Traders expect those developments to mean further gains after earnings.
Barchart data show approximately equal numbers of open call and put contracts on SpaceX. However, Barchart data show daily trading volume favored calls over the past week. Cboe LiveVol recorded 1.1 million contracts traded Monday, with volume 20% above the 30-day average. Cboe LiveVol data show 665,000 of those contracts were calls, with more calls bought than sold. Cboe LiveVol data also show traders bought more calls than puts and sold more puts than traders bought. Those trading patterns indicate bullish positioning before earnings.
SpotGamma data show the most popular call contract expiring Friday had a 170 strike and required about a 14% rally. Traders also made notable purchases of the month-end 190-strike call. That 40-cent contract requires SpaceX shares to rally 29% to break even. Such a rally would require SpaceX shares to rise through two additional share lockup releases. One release is scheduled two days after earnings, and another is scheduled for October 26. The releases together will make more than 1.6 billion shares eligible for sale. Earlier releases on September 9, 10 and 24 had no discernible effect on the share price.
SpaceX's implied volatility is much lower before this report than before last quarter's report, as reflected in the expected price swing. ThinkOrSwim data show SpaceX traded with implied volatility of 62 on Monday. ThinkOrSwim data show implied volatility exceeded 110 before SpaceX released second-quarter earnings.
Traders Expect SpaceX Shares to Rise After Earnings Report
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Summary
Traders are watching SpaceX shares ahead of the earnings report after the bell Tuesday, with options pricing in a 6% move. This follows a 13% drop after the first report in August. The company recently sent four astronauts to the ISS and expanded its mobile network. Call contracts outpaced puts in the options market. For the latest updates on altcoins to watch and the daily market report, traders are closely monitoring positioning and volatility shifts.
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