I saw a post somebody buying options in NASA ETF as a play for SpaceX IPO.
I think the whole musk-space thingy is so hyped they going to whack retail crowd that bought calls on every proxy name. But I'm not going to pretend I know how the market going to behave.
I think a better play is IV. It is so elevated it makes sense to sell premium, PUTs specifically. A bit of long bias, and the play IV in these names will crash after IPO.
I've dug three liquid proxies: NASA, RKLB, ASTS
I like the most NASA, mostly because it requires least capital. All trades below for CSPs.
NASA
Sell the 27 put for NASA in July. Collect $1.45 premium. Requires $2,700 collateral. Has 38 days to expiration.
Price 1.45
Delta -0.25
Theta -3.53
RoC 12 (estimated annualized return on capital)
P50 81 (estimated probability of 50% profit)
Margin 2700
Days to P50 9 (estimated days to reach P50)
Reasoning I got from the app I'm using:
`Sell the 27 put. Elevated relative volatility drove the decision, with current option volatility high enough to pay for a farther out-of-the-money strike.`
`The trade keeps the short side on the put side rather than the naked call. The stock trades in the lower half of its 52-week range, and the 27 put gives room below the current price while still paying a usable credit for a cash IRA.`
`Risk comes from only adequate options liquidity. The volatility setup helps, but fills may need discipline. No completed prior trades came back for comparison, so the decision rests on current pricing and liquidity. Show less`
The other two have similar metrics, and they going down so premiums are even richer and stricter can move further out.
ASTS had the highest RoC, 22% - I usually get 4-6% range but IV is so rich, that returns in cash secured account looks like trading with T-Margin
ASTS
Sell 90 put for ASTS in July. Collect $11.15 premium. Requires $9,000 collateral. Has 38 days to expiration.
RKLB
Sell the 100 put for RKLB in July. Collect $8.11 premium. Requires $10,000 collateral. Has 38 days to expiration.
PS
I just got NASA order filled at $1.70, oh well that was a very fast fill with a price better than nat.