#What are the implications of Cboe listing options on SpaceX?
Cboe Global Markets is set to introduce traditional equity options on SpaceX, starting Tuesday, June 16, which provides traders an unprecedented opportunity to take advantage of one of the most valuable public companies. Listing hinges on final validations from the Options Clearing Corporation.
The timing for this launch is particularly bold. SpaceX priced its initial public offering (IPO) at $135 per share on June 11, amassing $75 billion, and commenced trading on Nasdaq under the ticker SPCX on June 12. Within just four days, options traders will be able to participate.
#Why is SpaceX drawing attention?
SpaceX, following its IPO, boasts a post-IPO valuation of around $1.77 trillion, placing it among industry giants like Apple, Microsoft, and Nvidia. While the detailed contractual specifications for the SpaceX options are yet to be revealed, analysts predict significant interest in short-dated, out-of-the-money contracts. These contracts attract both institutional investors and retail traders searching for potential high returns on a newly listed entity.
#How does crypto play a role in SpaceX trading?
Interestingly, cryptocurrency platforms were ahead of the game, launching perpetual futures and tokenized products linked to SpaceX's value weeks before its official trading began. For instance, Coinbase offered a perpetual contract tied to SpaceX that settled in USDC, while Kraken introduced exposure through its xStocks product line. Trade.xyz created a perpetual contract reaching a reference price around $203, well above the $135 IPO price.
This price disparity between crypto valuations and the actual IPO points toward a speculative premium inherent in these assets, showcasing that early traders were willing to invest at a nearly 50% markup over the IPO price for early access.
#What does this mean for investors?
The introduction of SpaceX options creates two distinct avenues for gaining leveraged exposure. On one side, Cboe’s regulated options come with standardized contracts and established infrastructure, while the other side consists of crypto-native perpetual contracts, which generally feature higher leverage but also come with more risks due to their unregulated nature and higher operational hours.
A notable factor is volatility. As SpaceX has only been public for a short duration, there is no earnings history or established trading patterns to gauge volatility expectations accurately. Market makers pricing these contracts initially will lack data, potentially resulting in high premiums.
Investors face the simple yet daunting task of navigating the expectations surrounding a recently public company valued at $1.77 trillion. The discrepancy between the cryptocurrency market pricing SpaceX at $203 before its IPO and the available shares launching at $135 indicates some market traders may be running on speculative excitement rather than sound valuation principles.