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If you’ve been following SpaceX (SPCX), you already know the IPO’s been wild…
And I mean the kind of wild that makes even experienced traders hesitate. Options started trading Tuesday, I watched the stock jump 9% and caught myself thinking…
Maybe I should buy some…
And before I could act it was already up 17%. Moves like that remind you how fast an IPO can run and how easy it is to second-guess yourself.
But what you might not realize is just how expensive the options have become — and what that means for traders looking for income strategies. We’re talking about implied volatility around 250%.
You normally only see premiums like this in Biotech (XBI), not large and well-funded companies. That alone tells you how distorted the pricing is right now.
Someone I work with executed a trade this morning that captures the opportunity. He sold the $320 call for $2.50 while SPCX was trading near $200. That means the stock would have to spike roughly 50% in the next two days for that position to get threatened.
With the stock recently putting in 20% days, nothing’s off the table but the math’s still compelling.
The Math Behind These Premiums
The implied move on SPCX is only about $35, yet the market’s paying meaningful money to sell calls far beyond that range. For example, with the stock near $200, the $320 call — a strike $120 out of the money (OTM) — still trades for real premium.
You’d only lose if the stock surged roughly 60% overnight. That’s how inflated these premiums are when volatility hits this level.
Even if SPCX puts in another couple days of aggressive upside, you can still structure call sales well above the expected move and collect solid income. For advanced traders, this is where far OTM call selling becomes interesting. When an IPO’s volatility is stretched this far, the odds often favor mean reversion over continued acceleration.
These are of course my observations — not recommendations. Do your own due diligence and never risk more than you can afford to lose because as you should well know, NOTHING is guaranteed in trading!
Understanding IPO Patterns
If you zoom out, this type of behavior fits a familiar pattern. Most IPOs experience an early pop — sometimes a dramatic one — followed by a pullback as the initial excitement cools.
That “pop and drop” pattern is normal but traders still get caught chasing the top.
For context, look at Fundrise Innovation Fund (VCX), a fund that rocketed from $50 to as high as $575 within days of its IPO — it’s at $95 today. That kind of explosive move is possible in small, thinly traded offerings.
SPCX, on the other hand, is simply too large for a run like that. Its size alone makes a parabolic multi-hundred-percent surge structurally impossible.
The key takeaway here isn’t about predicting exactly where the stock goes next. It’s about recognizing when volatility creates asymmetric opportunities especially for income strategies.
When you see 250% implied volatility and premiums this inflated, you don’t ignore it. You study it, you quantify it, and you decide whether it fits your risk profile.
Stay sharp, stay disciplined, and let the market’s extremes work for you — not against you.
Graham Lindman
Graham Lindman Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
P.S. #SHOCKING: Caught on Camera… Woman Admits ‘I’m Taking Tom and Graham for Ransom’
For the past six months, investigative journalist Emily Turner has been tracking down some of the biggest names in trading for a classified project known only as Project Atlas…
Now, with the deadline just days away, she’s out of options.
Take a peek at Classified Update No. 1 to discover why she’s considering a move she never thought she’d make… and why Graham Lindman and Tom Busby may not have much of a choice.
