SPCX, vol delta, QQQ

SPCX

I promised I would write about something other than JPY today, so here we go. SpaceX is about to unlock a colossal number of shares, and this is a well-known fact and should soon be in the price. In theory.

SpaceX priced its IPO on June 11 at $135 a share. The IPO sold 556 million shares against roughly 13 billion shares outstanding, so only 4.2% of the company was available to trade. August 6 is the first major release. Up to 912 million shares held by employees and early investors are unlocked tomorrow, roughly 1.6X the existing public float. Further tranches free up regularly from now until December and then Elon Musk's 6.4 billion shares unlock June 2027. The tension is between these bearish facts and the fact that everybody knows these facts, and everybody knows that everybody knows these facts.

As a non-expert spectator, the three lockups I remember most vividly are CBRS, RBRK and CRWV. There was a fair bit of media attention around those, and you can see that SPCX dwarfs CRWV which dwarfed RBRK (CBRS didn’t register on this measure). Taking a look at those stocks, you can see that the lockup day was a tradable bottom, but the turn was not V-shaped.

That chart shows the stocks indexed to t0 = 100 where t0 is the lockup expiry. t0 for SPCX is tomorrow. Obviously, n=3 isn’t going to take anyone to the promised land, but the analogs are decent here. And I suppose my starting point is that this information is surely priced in at this point and the imminent supply shock is more likely to be a red herring than a useful bearish indicator at this stage. I suppose if you use the other three stocks as a rough guide, you could hope for a 20% rally in SPCX in the next 20-40 trading days. We are $111 right now, so that would mean you target something up around $133, assuming we are still here tomorrow. You can stop out below the round number of $100 (stop loss at $96.44 to give it a bit of room, let’s say).

I have no view on the underlying business. I believe the best lens for TSLA and SPCX stock is to think of them as memecoins—there is no rational valuation anchor. They are bets on hopes and dreams. This is not a sarcastic comment. Sometimes hopes and dreams come true! Using DCF or anything of that sort to study these stocks is a waste of time. My view here is simply that a supply shock is priced in and the market is ready for it. A relief rally is due. Nothing I write in here is ever investment advice. I don’t put single name stock plays in the sidebar[1], but if I did, I would put this one.

[1] Why not? The main reason is simply that my conviction on single names will never be as high as my conviction on macro / FX. I am happy to share my ideas, and I hope they lead to some new avenues of exploration for you or add another layer to an existing hypothesis. But since I am tracking the sidebar ideas and somewhat staking my reputation on the results of those trades, I do not think it’s wise to include the single name ideas in there. I do many of them in real life, but still—I am not an expert in SPCX trading. I might be missing something major. When I trade USDJPY, I feel much less insecure about what I might be missing.

How things change

I was watching BTC and ETH do nothing yesterday on a 1,000-point rally in the NASDAQ and flashed back to the bad old days of 2021 and imagined bitcoin would have been up 7% yesterday on that tape. Structural changes in vol like we have seen in BTC are important as they completely alter not just the size of the daily moves, but the correlation and vol-of-vol structure, too.

I was curious how the vol of some other stuff has evolved, so I made a chart. It shows 360-day realized vol, by year, and adds the current reading of the same 360-day lookback.

A single number like this misses some nuance, of course, as SLV vol has collapsed again but the 360-day lookback still reads very high due to the late 2025 silver and debasement trade bubble. No call to action here, I am just sharing because I thought it was kind of interesting.

And it would be rude not to do the same thing for FX. USDTRY!

Final thoughts

1. Donald Trump’s final warnings to Iran reminded me of this:

2. The research note linked below is unsurprising but it’s short and moderately interesting and it raises some issues that are worth thinking about. I know it’s socialist and/or Luddite to raise the question of tradeoffs around a new technology—I am told that we have no choice but to embrace all technologies, no matter how dangerous, or we might fall behind China. Anyhoo. Here’s the article…

3. Gold finally broke out. Anyone who bought the first dip to $4,000 and had the patience to hold this long—nice work. The dovish Fed is boosting the old debasement trade favorites as September odds of a U.S. rate hike have now dropped below 50% and Warsh’s hawkish credibility continues to leak. The market’s terminal rate is just 4% now, meaning there are now less than two hikes priced in between now and October 2027. Warsh is talking tough and doing nothing and the market is slowly repricing in response. If it were not for the Situational Awareness selling, we probably would have seen this equity and gold rally right after the dovish FOMC, but instead we got a scare trade first on forced liquidation, then what looks like a more rational dovish repricing once Citadel intervened as buyer of last resort.

It is likely that forced selling was the culprit behind the dovish Fed equity selloff, and the back end move was a red herring. Or maybe not. Either way, the debasement trade is back as the new Fed looks a lot like the old Fed, refusing to take a proactive stance on inflation and preferring, instead, to hope for the best.