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Geof and I are tracking the market’s reaction to today’s Fed meeting in real time. We’re breaking down how to approach the dip in SPCX and revealing the key institutional flows we’re watching for the rest of this short week [tap to join us for Profit Panel]
I dipped my toes into SpaceX (SPCX) options this week with a small position — around $300 worth.
It was a fast reminder of what happens when you trade options that are priced around $3,000 in raw premium.
When the underlying stock moves down just 0.5%, you can watch $200 instantly vanish from your position.
It is the kind of rapid intraday swing that makes your stomach drop if you are not prepared for it.
But here is the flip side: When your direction is right, a 12% winner gets you out of the trade cleanly.
That is the baseline trade-off with high-premium options.
The swings are dramatic in both directions.
You are paying for extreme leverage, and that leverage cuts both ways.
Why These Options Are Expensive — For Now
The real structural insight from this trade isn’t just about the volatility.
It is about timing, market plumbing and liquidity.
Much of the current options illiquidity exists because SPCX isn’t yet fully integrated into major broader indices like Vanguard Total Stock Market ETF (VTI) or Vanguard S&P 500 ETF (VOO).
Once tracking index inclusion kicks in over the coming days, these passive funds will be structurally required to buy in, which should materially expand daily trading volumes and tighten the bid-ask spreads.
These options are expensive right now, but they will likely cheapen as the market matures and more contracts are written.
Right now, we are dealing with limited supply, thin open interest and massive retail and institutional demand.
That naturally pushes implied volatility and premiums higher.
Currently, only about 4% to 5% of SPCX shares make up the available free float.
This is an exceptionally tight float for a mega-cap, making both shares and options scarce, which drives asset prices higher across the board.
As more contracts get written and the options chain fills out, liquidity will improve.
Better liquidity means tighter spreads and far more reasonable premiums.
If you are looking at SPCX options right now and thinking they look a bit too rich, you are entirely right.
If you wait, you will likely get a much better structural entry.
Personally, I am deploying short-term options strictly as a tactical play on immediate volatility, but I haven’t pulled the trigger on long-term equity shares.
Keeping these two strategies distinct helps maintain absolute clarity around risk and opportunity.
A Simple Takeaway
If you are thinking about trading expensive options — whether it is SPCX or any other high-premium mega-cap — keep these core principles in mind:
- Size Intentionally Small: Watching an SPCX option contract drop $200 on a mere 0.5% move in the underlying stock underscores exactly why conservative position sizing is mandatory.
- Expect Premium Crush: As the options market naturally develops with more expiration series and greater institutional volume, premiums should stabilize. Waiting for liquidity to build opens up a cleaner window for retail entries.
- Look at the Long-Term Foundation: Beyond the short-term options trading, SpaceX is already looking to leverage its historic IPO proceeds for strategic AI acquisitions. This adds a compelling fundamental layer to the patience thesis.
It is vital to recognize that SpaceX is a multitrillion-dollar mega-cap, not a fleeting microcap.
The trading opportunities here are going to persist for years.
Staying patient isn’t a missed chance — it’s responsible capital management.
For now, I am staying small, staying patient and letting the options market mature until the structural setup improves.
To better trading,
Alex Reid
WealthPin
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. Post-Fed Meeting Opportunity Lining Up…
I’m watching three stocks setting up pretty well right now, together with the best options to trade them!
Tap Here to Get the High-Conviction Plays!
Disclaimer: We develop tools and strategies to the best of our ability, but we can’t guarantee the future. There is always a risk of loss when past performance is not indicative of future results. The profits and performance shown are not typical, and you may lose money. Since the Alpha Flow Dashboard is a tool designed to help traders make informed trading decisions, results will vary by user, as there are multiple trades to choose from.
