If you didn't go all in on spacex IPO you're regarded
Author claims SpaceX IPO was 20% underpriced and details a risk-free Polymarket hedging strategy, urging an all-in approach.
- IPO was underpriced by 20% based on prediction market data.
- Risk-free arbitrage opportunity exists by hedging IPO shares on Polymarket.
- Kelly criterion optimization suggests going all-in for maximum log wealth.
It was literally free money, if you didn't buy it's genuinely over for you.
The IPO was underpriced from the expected market open price by 20%. This information is literally free for anyone who has internet resources. Polymarket gave the distribution:
https://preview.redd.it/yj8e1tgrh47h1.png?width=864&format=png&auto=webp&s=585126741807e44bb47fddf2dda36a72fb5dd9d8
There were also other markets you could have used:
https://polymarket.com/event/spacex-ipo-closing-market-cap-above
https://polymarket.com/event/spacex-ipo-closing-market-cap-higher-strikes
https://polymarket.com/event/spacex-ipo-closing-market-cap
https://polymarket.com/event/spacex-ipo-closing-market-cap-lowest-strikes
It's literally so easy, I just literally asked Claude to fit a probability distribution given all the prices and the share count. Underpriced by 20% for the median, I was given a PDF over price. I plugged it into the kelly criterion and just asked claude to optimize for log wealth. The kelly fraction was literally 1, meaning it was optimal to go all in. But even if you're risk averse, it's quite literally free money. Just hedge on polymarket and your IPO shares. You're notified before spacex market open about what shares you get so it's literally so free.
If you're comfortable with the ban, if you have $5k in polymarket and 37 IPO shares you can guarantee, worst case, $955 regardless of the share price. You could still make up to \~$1500, and that's closer to the expected case in hedge. Polymarket liquidity was high so this easily scaled for way larger positions.
Screenshot taken more than 12 hours before market open
I didn't do this because it's not kelly optimal to avoid all the risk, but, just saying it was literally free. I'm unemployed so I don't have much money, but I helped make my dad $8k and he's pretty happy.
If you don't want the ban you can just make the same bet on the month-long spacex market cap market. Easy.

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