Elon Musk's business empire is facing another volatile bout after a sharp selloff wiped a combined $1.5 trillion in market value from SpaceX and Tesla, with investors now bracing for a potentially pivotal moment as SpaceX prepares to report earnings and lift restrictions on insider stock sales next week.
Since reaching recent highs in mid-June, SpaceX shares have tumbled nearly 50%, while Tesla has fallen about 18% following last week's earnings report. The combined losses have erased roughly $1.5 trillion in market capitalization.
Now, Wall Street is focused on two major catalysts arriving within days of each other. SpaceX is scheduled to report quarterly earnings next Tuesday. Just two days later it will face the expiration of an early lockup period that will allow many insiders to begin selling shares.
According to options pricing, investors are preparing for a dramatic move in SpaceX shares after earnings. Current contracts imply a roughly 15% swing in either direction, while implied volatility has surged to 122%, a level higher than every company in the S&P 500 except SanDisk, which plunged 16% on Tuesday.
Unlike most newly public companies that impose a standard 180-day restriction before insiders can sell shares, SpaceX's lockup structure allows eligible shareholders to sell sooner after earnings. More than 900 million shares, representing roughly 20% of eligible locked-up stock, could become available for trading once the restriction expires.
Implied volatility typically falls sharply after a company releases earnings because the biggest source of uncertainty has been resolved. But SpaceX presents a different scenario. Even after earnings are released, traders must still navigate the possibility that employees, executives and early investors could decide to cash out large portions of their holdings once the lockup ends.
As a result, some analysts believe volatility could remain elevated or even increase instead of following its usual post-earnings decline. Options data reflects those concerns. Contracts expiring on Aug. 7 are trading with implied volatility near 160%, according to thinkorswim data cited by CNBC. By comparison, Tesla options currently carry implied volatility around 52%, with contracts trading near 55%.
Despite the steep decline in SpaceX shares over the past several weeks, many retail investors continue betting on a rebound. Trading activity remains heavily skewed toward bullish call options. On Tuesday alone, investors purchased nearly 100,000 call contracts compared with about 46,000 put contracts, suggesting many traders continue to expect higher prices.
However, institutional investors appear to be taking a more measured approach. Data from SpotGamma cited by CNBC shows the most actively traded contract on Tuesday was the $330 strike call option expiring next Friday. Traders executed roughly 21,000 contracts worth about $770,000 in premium, highlighting continued speculation that the stock could recover quickly after earnings.
Larger investors, however, favored a less aggressive strategy. Among the biggest premium trades was the $130 strike call option expiring in November. Although only about 5,400 contracts changed hands, those trades represented approximately $8.7 million in premium, indicating that institutional traders may be positioning for a longer-term recovery rather than an immediate post-earnings surge.
