For months, investors who wanted SpaceX bought the next best thing. With the real stock finally trading, those stand-ins are tanking.
And yet traders are piling right back in. The reason says a lot about this market.
Before Friday, you couldn't buy SpaceX. So traders bought companies tied to it instead.
These proxy stocks soared for weeks on borrowed hype. Then the real shares arrived, and the air came out.
EchoStar owns about 3% of SpaceX. Its stock, which trades as SATS, fell 14%.
AST SpaceMobile dropped nearly 13%. Its satellites are set to ride a SpaceX rocket next week.
Virgin Galactic gave back a big gain and fell 34%. The drops came fast once the real deal went live.
Spire, another space name, got swept up too. The whole group moved on SpaceX, not on its own results.
Both names whipsawed during the day. EchoStar was up about 5% early before it reversed.
Buying a proxy stock was like buying a ticket to the opening act. You went because the headliner was sold out.
Now the headliner is on stage. The opening act is clearing out.
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The selling didn't scare options traders. Calls are bets that a stock will rise.
Calls outnumbered puts across all three names. AST was the busiest by far.
More than 250,000 AST options contracts traded for over $60 million. That is a lot of money chasing one idea.
Money is also flooding into space funds. Those funds then have to buy these same stocks.
Two of them, UFO and JEDI, are up more than 30% this year. Both own a slice of AST.
Cory Johnson of Epistrophy Capital Research said the swings aren't about the businesses. People who can't get SpaceX are grabbing whatever is closest.
Here's the catch: these prices aren't really about the companies. They move on hope for a stock most traders can't yet hold.
Webull's U.S. chief sees more of this ahead. He thinks SpaceX could become one of the most active options names for small investors.
Tesla is one of those names today. Many expect SpaceX to join it fast.
The options market expects huge swings in these names. That makes them costly to trade, but buyers pay up anyway.
SpaceX options start trading Tuesday. Demand is expected to be huge.
Once traders can bet on the real thing, the stand-ins may matter less. Still, the proxy trade may not vanish overnight.
For now, these names still draw real money. The launch didn't end the trade, it just changed it.
The proxies had their moment, and the main event just started.
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