SpaceX Has Massive Multiyear Put Options Volume As SPCX Falls Below IPO Price

SpaceX Corp (SPCX) stock has fallen below its $150 IPO price, but institutional investors likely sold a massive volume of SPCX put options at $80.00 . That is $74 below today's price, expiring almost 2.5 years from now.

SPCX is down slightly today at $149.00 , as it continues to drop below its original $150 IPO price less than a month ago on June 12. It's also below the first day trading closing price of $160.95.

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The huge volume of put options in SPCX today is at the top of Barchart's Unusual Stock Options Activity Report. It shows that the put option volume of 17,200 contracts at $80.00 (for expiry at the end of 2028) is almost 120 times more than the prior number outstanding.

That puts it at the top of the list of unusual options trading today (see below).

Note that this expiry period is December 15, 2028, 891 days from now (i.e., 29.29 months away). Moreover, the $80.00 strike price is 46.3% lower than today's price ($69 lower), making this an "out-of-the-money" (OTM) put play.

This long-dated, deep OTM play is usually initiated by a short seller, often an existing shareholder. That way, the investor can gain extra income and also have a potentially lower buy-in point.

For example, the $16.80 midpoint premium received by the short-seller (initiator) represents 21% of the initial collateral required ($80.00 per share).

So, for example, for every put contract shorted, the investor would have had to post $8,000, and the short-put play would have earned $1,680:

$2,100 / $8,000 = 0.21 = a 21% short put yield for 29.3 months

That works out to a per month yield of 0.72%, almost 3/4ths of 1%, and 8.60% per annum:

In other words, this is a great way for an institutional investor to earn a high yield on spare cash, as well as potentially lower their all-in cost.

Here's why. If SPCX falls to $80 on or before the end of 2028, the account will be assigned to buy 100 shares of SPCX at $80.00. However, the income, already received, lowers the breakeven point:

That is 57.5% lower than today's price. It shows why investors love to sell short deep out-of-the-money (OTM) puts with a long-dated expiry period.