Space stocks jump on high demand as investors seek any means to ‘get long SpaceX’

Today is a big day. If you’re looking for clues as to what might happen, look at proxy trading which has been all the rage among options traders.

Options volumes are increasing on stocks that are related to SpaceX ahead of Friday’s historic launch of the new public company owned by the world’s richest man. While Wall Street debates whether the $1.75 billion IPO is an expensive scam or the future of humanity, traders are piling in on the call for anything that could hold a collective stake.

Shares of EchoStarThe Colorado-based network business that owns about 3% of SpaceX stock, rose 11% on Thursday and options volume was more than eleven times the 30-day average in ‘SATS’, according to data from Cboe’s LiveVol. AST Spacemobileexpected satellites to be launched on a SpaceX rocket next week, jumped 12% to nearly $140 million in options trading.

I mean Virgin Galactic Holdings share pricethe stock lost 99% from top to bottom, we saw options trading burn, about 3.5 times more calls bought than puts.

“There’s a lot of short-term call buying in these names as a way to get long SpaceX,” Danny Kirsch, head of trading at Piper Sandler, said by phone. “I have no doubt that part of it is the need for retail but there is also a need for a SATS facility.”

Shares of EchoStar were up another 5% in early trading on Friday. The AST SpaceMobile was also very commercial.

The same demand for mutual funds directed at the space segment also creates a supply bottleneck that helps keep proxy game prices high, according to Cory Johnson, chief market strategist for San Francisco-based Epistrophy Capital Research.

ETFs like Procure’s ‘UFO’ and Defiance’s ‘JEDI’up 119% and 35% over the past year, respectively, both shares owned by ASTS.

“People who can’t afford SpaceX or don’t think they can afford it fast enough, have been plowing money into these ETFs so these funds should be buying shares of AST, EchoStar, Spire, etc,” Johnson said on the phone. “It has nothing to do with the quality of these companies, the demand for their products, or their cash flow.”

One thing seems clear: demand for SpaceX options that will begin trading on Tuesday may not be astronomical. The IPO is set to be priced at $135 a share, a sweet spot for sellers who don’t mind paying expensive premiums for a stock that’s called cheap.

EchoStar and AST, which closed at $128 and $97.56 on Thursday, are trading at volatility levels of 97 and 129, respectively.

“SpaceX has the potential to become one of the top-selling options names among retail investors,” said Anthony Denier, Group President and US CEO of Webull, in an email. “The combination of a potentially high share price, significant volatility, and large public interest creates an ideal environment for options trading. When stocks become scarce or expensive, put options may provide investors with a more realistic way to express a bearish view than shorting the stock outright.”

Teslathe original Musk cult stock, is one of the best-selling names among options traders.