SpaceX and Tesla valuation plunges $1.5 trillion ahead of insider lockup end

The past month has been tough for Elon Musk, if that term even applies to the world's richest person. The coming week could be even more volatile, judging by options activity around SpaceX's earnings release on Tuesday and the expiration of the insider lockup two days later. Options markets suggest a 15% move in SpaceX after the report, with implied volatility at 122 - higher than any S&P 500 company except SanDisk, which fell 16% on Tuesday.

Earnings also activate SpaceX's special lock-up rule, allowing insiders to sell shares sooner than the usual 180-day waiting period. That makes over 900 million shares - 20% of their eligible locked-up holdings - available for trading.

The lockup ending so soon after the earnings call creates a challenge for options traders, who typically expect implied volatility to drop post-earnings. Earnings are a known risk that shareholders frequently hedge against; after that risk clears - even if the stock plunges - volatility normally subsides. For SpaceX, traders need to decide which event poses a greater threat: the earnings report or the lockup expiry. If insiders offload shares during the lockup, volatility might remain high or even increase after earnings.

Get the market news that matters in a five-minute read with Market Briefs, our free daily newsletter

SpaceX options expiring Aug. 7 carry an implied volatility of 160, per thinkorswim data, versus 55 for Tesla, which has an implied vol of 52. Through the sell-off, SpaceX traders have stayed largely optimistic. Daily call volume exceeds put volume; on Tuesday, traders bought roughly 100,000 calls compared to only 46,000 puts.

However, a gap is emerging between retail and institutional traders, with the latter leaning more cautious. The most active contract Tuesday was the 330-strike call expiring next Friday, with 21,000 trades totaling $770,000 in premium, according to SpotGamma. When sorted by trade size, the sentiment remains bullish but less exuberant: the 130-strike November call saw just 5,400 trades but $8.7 million in premium.

It reflects a broader shift in how investors are thinking about high-growth, high-hype companies. Both SpaceX and Tesla were riding huge optimism. Now reality is checking in.

If you own either stock directly, you have already felt the pain. But the ripple effects matter even if you do not. When the world's richest man sees his companies lose that much value, it can weigh on sentiment in the whole market. It can also create opportunities if the sell-off overshoots.

The key question is whether next week's events end the uncertainty or deepen it. A clean earnings beat and a modest lockup sell-off could stabilize things. A miss or a flood of insider selling could send SpaceX stock even lower.

Either way, the next few days will tell investors a lot about what kind of company SpaceX really is - and whether the hype was ahead of the numbers. Keep an eye on that 15% swing. It could go either way.

Join Market Briefs, our free daily newsletter, for a quick daily rundown of the markets