🚨I’ll be live at 10 a.m. ET with Graham🚨
We’ll cover the aftermath of Friday’s SpaceX IPO and more [tap to join us for Opening Playbook]
What happens when your thesis is spot-on but the sympathy play falls apart?
You ever nail a call so perfectly it almost hurts?
That was me this week with Space Exploration Technologies (SPCX).
I said we would see a 30% day-one pop — and that’s exactly what happened. SPCX ripped roughly 20% intraday off its $135 IPO price and closed its first session near $161.20, pretty much matching what I laid out earlier in the week.
So naturally, I should be celebrating, right?
Not quite.
Because while I called SPCX perfectly, the trade I actually put on — a sympathy play on Procure Space ETF (UFO) — went the exact opposite direction. Instead of popping 10% like I expected, UFO tanked 10%. And right now, I’m sitting on a position that’s down about 85%.
Yeah. Ouch.
Here’s what’s wild about it: The thesis was sound. When SPCX gaps up and adds hundreds of billions in market cap, you’d expect the correlated names — AST SpaceMobile (ASTS), Intuitive Machines (LUNR) and Rocket Lab USA (RKLB) — to follow.
That’s how this usually works. But this time, when SPCX ripped from the 11th to the 12th hour, UFO showed no response at all. Not even a hint of correlation.
I actually had a gut feeling something was off. The night before, around 8 p.m. ET, my space basket was pumping aggressively. I even told a few people it felt a little fishy.
But I still thought the gap-up would drag things higher. It didn’t.
Why the Correlation Broke
What seems to have happened is that UFO had already priced in an even higher SPCX valuation than the $161 close we saw on day one.
The move we saw on Friday didn’t add anything new to UFO’s view of the world, and SPCX only makes up about 8% of UFO’s holdings, so the direct correlation isn’t as tight as you might think.
There is also something else worth remembering. Just because an ETF holds a name doesn’t mean it gets instantly revalued. Hot IPOs can take time to settle into existing baskets.
In wild environments like this, it’s not surprising when things aren’t fully priced in at the open. And when options begin trading — which should happen early next week — that usually triggers fresh rebalancing flows that can ripple through the entire basket.
On top of that, when all eyes are on a massive debut like SPCX, money often rotates aggressively. Capital flows out of smaller peers and into the headline name.
When that selling pressure outweighs any buying driven by the valuation jump, you don’t get sympathy pops — you get sympathy fades.
One more thing traders forget: A lot of ETF and basket adjustments aren’t automated. Allocations are often adjusted manually and on schedules.
That means the ripple effects from big moves don’t always hit immediately. Sometimes it takes days before the rest of the sector realigns with a new benchmark valuation.
So What Now?
I’m holding the position. It’s down so much at this point that the risk-reward actually favors just letting it ride and seeing if we get a catch-up move next week.
I need about a 25% move in just five trading sessions to feel good about it again — which is a big ask but not impossible for these lower-cap sympathy plays.
The next real catalysts should come when options start trading and the various funds begin rebalancing around the updated valuation.
Those kinds of adjustments tend to create secondary waves of movement. If we see any catch-up at all, it’ll likely show up around Tuesday or Wednesday once everything starts to settle.
Whether that happens is another question entirely. It’s possible the original valuation logic still pulls some of these names higher once things rebalance.
It’s also possible SPCX just vacuumed up all the attention and liquidity, leaving the rest of the space basket drifting lower for a while.
It’s simply too early to judge the full sympathy picture. Day one is almost never the moment when you get clean one-to-one correlations.
It usually takes weeks before an entire sector stabilizes around a new anchor valuation.
The Lesson Here
This is one of those trades where everything lined up — except the one thing that mattered.
Correlation broke down. The sympathy play didn’t play. And even though I called the core move perfectly, the structure I used to capitalize on it failed.
It’s a reminder that survival in this game is just as important as being right.
You have to understand how your capital is deployed, how much of it is high-risk versus long-term and whether a bad streak knocks you out of the game entirely.
If three trades going against you means you’re done, that’s a sign to pause and rethink everything before moving forward.
And above all, you have to give your strategy enough repetitions to let the math work in your favor.
One failed basket trade doesn’t define anything. Over time, if you’re trading with an edge, the law of large numbers does the heavy lifting.
For those still hunting for opportunity in the space names, I do think some of them remain tradable — but tactically, not through blind averaging.
A name like Rocket Lab USA (RKLB) can still offer solid setups, but only with clear entries and tight stops. Precision matters more than ever in sectors going through this kind of volatility.
I’ll update you next week once we see how the options flow shakes out and whether the basket begins to realign — or whether this one just goes down as a tough lesson learned.
Now don’t forget to join us at 10 a.m. ET weekdays for Opening Playbook, and at 3:30 p.m. ET Closing Playbook!
Nate Tucci
Tucci Trades
You can also follow along and join the conversation for real-time analysis, trade ideas, market insights and more in my official Telegram channel!
Important Note: No one from the New Money Crew team or Tucci Trades will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
