SpaceX Has Huge, Unusual Put Options Volume

Space Exploration Technologies Corp. (SPCX) (“SpaceX”) showed huge, unusual put options volume on Friday, over 82 times the prior volume, in an out-of-the-money (OTM), i.e., lower, strike price. Is this a way to buy SPCX cheaper and get paid?

SPCX closed at $152.71 on Friday, Sept. 18. That’s up from a recent low of $108.27 on Aug.5. However, as the chart below from Barchart shows, SPCX is close to its opening IPO price of $150 on June 12 and its closing price that day of $160.95.

More News from Barchart

That’s why today’s heavy put option volume at a deep discount is so unusual. Friday’s Barchart Unusual Stock Options Activity Report shows this.

It implies some institutional investors think SPCX stock is set to crash again, or they are shorting these puts to set a potential lower buy-in point.

The Barchart Report shows that over 9,600 put contracts traded at a $115 strike price, almost 25% lower than Friday’s close. Moreover, the expiration date is only 39 days away (Oct. 30). That is not a long time to bet on SPCX crashing 25%.

Maybe buyers are betting that SpaceX’s upcoming results release will be disastrous. But its Q3 earnings release isn’t due until Nov. 5. That’s well after these options expire.

So, it seems logical that the initiators of this heavy put activity are short-put investors. They are happy to be obligated to buy SPCX at $115 if it drops to that level on or before Oct. 30.

In return, they collect $68 after posting $11,500 in collateral for one put contract. That works out to an expected one-month-plus yield of 0.59%.

If repeated for three months, the investor collects 1.773%, or for a year, 7.09%. This assumes the investor collects the same yield each month.

Will SPCX Drop 25%, or Is It Fairly Valued?

So far SpaceX is not expected to make positive earnings per share (EPS) in its upcoming earnings release. However, for 2026, analysts forecast 14 cents EPS, and by next year they expect to see $1.74 in EPS.

That puts it on a forward price/earnings multiple of 87.8x, a fairly high valuation. However, most SPCX investors are taking a long-term view. They see it as a good bet for the long run, expecting EPS to keep rising.

Another reason is that SpaceX’s revenue is forecast to more than double next year to $108.3 billion (year ending Jan. 2028) from $44 billion this year (ending Jan. 2027). By the end of this year, analysts will begin forecasting 2028 revenue, and it could rise 50% or more by then.

If run-rate revenue reaches $200 billion in 2028, its price/revenue could be 10x or less (i.e., given its present $2 trillion market cap). That could be why analysts have higher price targets (PTs).

For example, the average PT of 36 analysts surveyed by Yahoo! Finance is $222.42 per share. That’s more than 45% over Friday, Sept. 18’s closing price. Similarly, Barchart’s mean survey PT is $220.03 (+44% upside).

However, SpaceX is still generating large negative free cash flow (FCF). Last quarter alone, it had an outflow of $15.96 billion. In the past year, FCF was negative $32.5 billion, according to data from Stock Analysis.

SpaceX has $100 billion in cash and securities on its balance sheet, so it can afford this, at least for the time being. Investors are hoping that with higher revenue, especially its high-margin compute power leasing, FCF will turn positive sooner rather than later.

That may push SPCX stock higher (and vice versa, if analysts can’t forecast positive FCF anytime soon).

The bottom line, however, is that SPCX seems to have good upside, and shorting OTM SPCX puts is one way to play this upside.

On the date of publication, Mark R. Hake, CFA did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com