r/wallstreetbets
SpaceX is gonna rip and options is the best way to play
Author plans to buy SpaceX call spreads at IPO, citing massive oversubscription and forced index buying for short-term gains.
- Massive oversubscription creates a strong buy wall in the secondary market.
- Fast-tracked index inclusion will force massive passive buying.
- Historical trends of space IPOs show significant price surges initially.
- Monumentally overvalued at 100x revenue while still losing money.
- Expected to experience a massive drop after the initial hype fades.
We all know SpaceX is monumentally overvalued. Never bet again Elon but the numbers are just way too insane. 100x revenue and still losing money. 2.105T market cap. At some point this is gonna drop like crazy. But not before us regards take profits. So what’s the play here?
Tuesday June 16th is when the options market opens for SpaceX. I’m gonna be placing call spreads from whatever the starting price is to \~25% above it for a 2.5 week contract. And it’s gonna work (hopefully) because of the fact that early demand is gonna be insane and if it is anything like past space related IPO’s this is gonna rip for the first few weeks.
TLDR: demand is insane, oversubscribed by 4x, indexes like Russell and QQQ are gonna pile in and drive prices up, similar to RKLB IPO history.
1. The Oversubscription Demand Model
When a company goes public, analysts measure early interest using the oversubscription ratio. This compares total cash orders to the actual dollar amount of shares available.
The SpaceX Data: SpaceX raised a record $75 billion by pricing 555.6 million shares at $135. However, Reuters reported that total investor demand topped $250 billion.
The Math: The IPO is roughly 3.5 to 4 times oversubscribed. This means $175 billion in cash orders was rejected and sent away empty-handed.
The Impact: According to standard IPO volume models, this creates an immediate "buy wall" on the secondary market. Eager investors and institutions who were locked out must now buy shares directly on the open market, pushing the price up rapidly in the first 5 to 10 trading days.
2. The Forced Index-Inclusion Model
Unlike standard companies that wait months to join major stock market collections, index providers have fast-tracked SpaceX due to its historic $1.77 trillion valuation. This creates predictable, legally mandated volume spikes:
Day 5 Spike (June 18): Russell Large-Cap Funds must execute massive buying programs all at once at the market close to add the stock.
Day 10 Spike (June 26): MSCI Global Funds complete their mandatory buying phase.
Day 15 Spike (Early July): The Nasdaq-100 (QQQ) forces index tracker funds to buy billions of dollars of the stock.
Because your options expire on July 2, your trade sits perfectly inside this triple-wave index window. This structural buying acts as a powerful safety net, absorbing shares and driving the price higher regardless of regular market sentiment.
3. Historical Trends: The "Musk Premium" and Space Peers
Looking back at how similar high-hype retail stocks behaved over a 2.5-week stretch gives a clear picture of what a 26% move looks like:
Rocket Lab (2021): Rose 107% in its first two weeks, jumping from $10 to over $20 as retail momentum flooded in.
The "Elon Factor": Companies tied to Elon Musk experience retail trading volumes that regularly break standard valuation models. Traders willingly pay an extreme premium to own a piece of his ecosystem.
⚠️ The Main Risk to this play
The upside demand is historic, SpaceX is the largest IPO in world history. Moving a $1.77 trillion stock requires a massive amount of money. (Kinda got proven by the \~20% jump on Friday tho)
Good luck and let’s make some money before the SpaceX bubble explodes like their Starships.