Elon Musk’s stocks lose $1.5 trillion this month

In Short:
– Elon Musk’s SpaceX and Tesla have lost $1.5 trillion in market value since mid-June.
– Traders anticipate significant price movement in SpaceX due to upcoming earnings and insider lockup expiration.

Elon Musk’s companies, SpaceX and Tesla, have collectively lost $1.5 trillion in market capitalisation since mid-June.This decline includes a nearly 50% drop in SpaceX’s valuation since its peak and an 18% decrease in Tesla’s stock price following recent earnings.

Market volatility rises

The upcoming earnings report for SpaceX next week comes with heightened uncertainty due to an impending insider lockup expiration.

Options pricing indicates a potential 15% price swing in SpaceX after earnings, with a considerable implied volatility of 122.

This upcoming lockup period allows insiders to trade over 900 million shares, or 20% of their locked-up stock.

Traders face a dilemma regarding the greater risk: the first earnings report or the lockup period allowing for potential insider selling.

Implied volatility for SpaceX contracts is at 160, while Tesla stands at 52, highlighting significant market speculation.

Despite the downturn, sentiment remains cautiously optimistic among SpaceX traders, with more calls than puts being purchased.

Tuesday saw nearly 100,000 call options bought versus 46,000 puts, indicating a bullish trend.

Nonetheless, a gap is emerging between small and large traders, with larger traders exercising more caution.

The most actively traded contract was the 330-strike calls, showing significant interest with $770,000 in volume across 21,000 trades.

Another option, the 130-strike call set to expire in November, also indicates bullish sentiment but with reduced aggressiveness, witnessed through $8.7 million of premium traded.