SpaceX lockup earnings test follows $1.5 trillion Musk stock selloff

SpaceX lockup earnings risk has become the next pressure point for Elon Musk-linked equities after SpaceX and Tesla lost a combined $1.5 trillion in market value since mid-June, CNBC reported. The decline includes an almost 50% slide in SpaceX from its high and an 18% fall in Tesla since last week’s earnings, according to CNBC.

The market focus now shifts to SpaceX’s earnings report on Tuesday and the end of an insider lockup two days later. CNBC reported that options prices imply a 15% move in SpaceX shares after the results, a sign that traders are bracing for a large swing in either direction.

SpaceX shares were quoted at $116.70, up $3.20, or 2.82%, at 3 p.m. EDT, according to the market data shown by CNBC. Tesla was quoted at $306.45 in the same market display.

What is the SpaceX lockup after earnings?

A lockup restricts insiders from selling shares for a set period after a listing or other market event. CNBC reported that SpaceX has an unusual arrangement in which earnings trigger an earlier release than the standard 180-day period, allowing insiders to begin selling sooner.

That mechanism could put more than 900 million shares into the market, equal to 20% of the eligible locked-up stock, CNBC reported. If insiders choose to sell, the additional supply could affect trading conditions, although the source data does not state how many shares insiders will actually sell.

The timing makes the options setup less straightforward than a typical earnings week. Options prices often reflect higher expected volatility before earnings because investors hedge against the uncertainty of results, and that volatility commonly drops once the event has passed. CNBC reported that SpaceX’s lockup release could keep volatility high after the earnings announcement if traders see insider sales as a separate risk.

Implied volatility on SpaceX stock stood at 122, CNBC reported, above every company in the S&P 500 except SanDisk, which dropped 16% on Tuesday. Contracts expiring Aug. 7 carried implied volatility of 160, according to thinkorswim data cited by CNBC. Tesla’s comparable figure was 55, while the stock itself was trading with implied volatility of 52.

How are options traders positioned?

SpaceX options activity still shows more demand for upside exposure than downside protection, according to CNBC. Traders bought nearly 100,000 calls on Tuesday, compared with 46,000 puts. Calls give buyers the right to purchase shares at a set price, while puts give buyers the right to sell at a set price.

The split between smaller and larger trades is becoming more visible, CNBC reported. SpotGamma data cited by CNBC showed that the most actively traded contract by volume on Tuesday was the 330-strike call expiring next Friday, with $770,000 in premium spread across 21,000 trades.

Larger trades looked less aggressive while still leaning bullish, according to the same SpotGamma data. The November 130-strike call traded 5,400 times but accounted for $8.7 million in premium, CNBC reported.

The coming week therefore concentrates two market events in quick succession: SpaceX’s first earnings report and a lockup release that could allow a substantial block of insider stock to trade. For investors and traders, the key distinction is that the earnings result is a scheduled information event, while the lockup creates potential supply whose size depends on insider decisions that have not been disclosed.

This story draws on original reporting from CNBC.