SpaceX lockup period adds new test after Musk stocks lose $1.5 trillion
SpaceX and Tesla have shed $1.5 trillion in value since mid-June as options traders brace for SpaceX earnings and insider selling risk.
By Jordan Bell · Startups & Deals Reporter
· 3 min read
The SpaceX lockup period is becoming the next major test for Elon Musk-linked stocks after a sharp reset in market value. CNBC reported that SpaceX and Tesla have together lost $1.5 trillion in market capitalization since mid-June, a move that matters for retail investors because it combines two familiar risks: earnings volatility and potential insider selling.
SpaceX has fallen almost 50% from its high, while Tesla is down 18% since reporting earnings last week, according to CNBC. Tesla shares were recently quoted at $306.45 in CNBC market data, while SpaceX was quoted at $116.70, up $3.20, or 2.82%, at 3 p.m. EDT.
The next pressure point is SpaceX’s earnings report on Tuesday. Options pricing cited by CNBC points to an expected 15% move in the stock after the report. In options markets, that expected move is based on implied volatility, a measure of how much traders think a stock may swing over a given period.
What is the SpaceX lockup period?
A lockup period limits when insiders can sell shares after a company comes to market or after certain corporate events. CNBC reported that SpaceX has an unusual setup that lets insiders begin selling earlier than the more common 180-day period, with the lockup ending two days after earnings.
That timing puts more than 900 million SpaceX shares in play, equal to 20% of the eligible locked-up stock, according to CNBC. If insiders sell, the added supply can weigh on a stock, though the actual market impact depends on how much is sold and how buyers respond.
The timing also complicates a pattern options traders often expect around earnings. After a company reports results, implied volatility often drops because a known event has passed. In SpaceX’s case, CNBC said traders are weighing whether the earnings report or the lockup expiration creates the bigger risk.
Data from thinkorswim cited by CNBC showed implied volatility of 160 for SpaceX contracts expiring Aug. 7. That compares with 55 for Tesla contracts, while Tesla’s current implied volatility was listed at 52. CNBC also reported that SpaceX’s overall implied volatility stood at 122, above every S&P 500 company except SanDisk, which fell 16% on Tuesday.
How are SpaceX options traders positioned?
Options activity still shows more demand for upside bets than downside protection, according to CNBC. Traders bought almost 100,000 SpaceX call options on Tuesday, compared with 46,000 puts. Calls give buyers the right to purchase a stock at a set price, while puts give buyers the right to sell at a set price.
SpotGamma data cited by CNBC showed the most active SpaceX contract by volume on Tuesday was the 330-strike call expiring next Friday. Traders bought about $770,000 worth of those contracts across 21,000 trades.
Larger trades appeared less aggressive, though still tilted bullish, according to the same SpotGamma data. The November 130-strike call traded 5,400 times but represented $8.7 million in premium, CNBC reported.
For investors watching Musk-related stocks, the key issue is timing. SpaceX earnings may deliver the first move, but the insider lockup can extend volatility if selling pressure appears after the report.
This story draws on original reporting from CNBC.
