Musk companies lost $1.5T. SpaceX lockup adds a twist

SpaceX and Tesla have erased a combined $1.5 trillion in market value since mid-June. SpaceX has fallen almost 50% from its peak. Tesla has dropped 18% since earnings last week.

The next test comes Tuesday, when SpaceX reports earnings for the first time. Two days later, the lockup period ends for insiders, allowing them to sell shares earlier than the typical 180-day window. That puts about 900 million shares, or 20% of eligible locked-up stock, on the table for trading, according to the company's filings.

Options prices reflect the uncertainty. Implied volatility on SpaceX sits at 122, higher than every S&P 500 stock except SanDisk, which dropped 16% on Tuesday. Contracts expiring Aug. 7 carry implied volatility of 160, according to thinkorswim data. Tesla trades with implied vol of 52.

Earnings usually cause implied volatility to fall after the event, since the predictable risk of the report passes. The lockup period complicates that calculus. If insiders sell, volatility could stay elevated or even rise after earnings, traders said.

Despite the sell-off, SpaceX options traders have remained bullish. On Tuesday, more than 100,000 calls traded, compared with about 46,000 puts, SpotGamma data show. The most popular contract by volume was the 330-strike call expiring next Friday, which saw $770,000 in premium across 21,000 trades.

The picture shifts when sorted by trader size. Large traders are more cautious. The 130-strike call expiring in November traded only 5,400 times but carried $8.7 million in premium, indicating bigger money is hedging or positioning for a longer time frame, SpotGamma said.

Tesla's earnings last week triggered the 18% drop. The stock has been under pressure from softer demand and margin concerns. The broader Musk sell-off erased gains accumulated during the first half of the year.

The lockup and earnings combination creates a rare setup for options traders. Typically, earnings volatility decays after the report. Here, the lockup introduces a second risk event that could sustain or amplify volatility through the following week.

SpaceX's lockup structure is unusual. Most companies require insiders to hold shares for 180 days after an IPO. SpaceX's terms allow early sales two days after the first earnings report, a condition that rewards early investors but also concentrates selling pressure around a single date.

Traders are watching the open interest on the 330-strike call. If that position unwinds after earnings, it could signal a shift in sentiment. For now, the call-to-put ratio remains skewed bullish, the divergence between retail and institutional flow is widening.