SpaceX Challenges Microsoft for No. 4 Market Cap as Options Debut Ranks Third in Volume

Bullish call options make up 70% of trading

Implied volatility is about double that of Tesla and Nvidia

"It could surpass Tesla and Nvidia to become the top options stock"

SpaceX surged on June 16, overtaking Amazon.com to become the fifth-largest company by market value in the US stock market. At one point, it also moved past Microsoft. The stock's jump coincided with the first day of options trading, which sent volume soaring.

In New York trading, SpaceX climbed as high as $225.64 shortly after 10 a.m. Eastern, lifting its market capitalization to $2.94 trillion.

The rally briefly pushed SpaceX ahead of Amazon, with a market value of $2.66 trillion, and Microsoft, at $2.93 trillion, placing it fourth by market capitalization. The stock later gave up some gains and traded narrowly below Microsoft in the race for the No. 4 spot.

The surge was driven in part by the launch of options trading in SpaceX shares on June 16.

SpaceX options, which began trading that day, quickly became one of the busiest corners of the options market.

CNBC reported that more than 300,000 SpaceX options contracts changed hands in less than 30 minutes after trading began. Data from thinkorswim showed call volume exceeded put volume, while call buying was more than double put buying.

Data from SpotGamma showed more than $400 million in SpaceX option premium traded during that period, with more than $300 million tied to call options. The most actively traded contract by volume was the $220 call expiring Thursday, with the strike price close to the stock's market price after SpaceX jumped 16%. The $210 call, also near the current stock price, was popular as well and logged more than $22 million in premium shortly after trading opened.

SpaceX options were the third-most traded that day, behind only Tesla and Nvidia.

Bullish positioning in the options market could fuel further gains if market makers that sold calls are forced to buy additional shares to hedge their exposure.

Bloomberg reported that Chris Murphy, co-head of derivatives strategy at Susquehanna Group, said volatility in the options market was skewed sharply to the upside, suggesting investors were more interested in participating in a rally than hedging downside risk.

Implied volatility, a key gauge of options demand, started at elevated levels. Three-month implied volatility had already reached 110% to 115% early in the session. As of 11:30 a.m. Eastern, SpaceX implied volatility stood at 135.

In options markets, implied volatility refers to annualized standard deviation. An implied volatility reading of 135% means that, statistically, there is a one-standard-deviation probability, or about 68.3%, that SpaceX shares will move up or down 135% from the current price over the next year.

Tesla's implied volatility currently ranges from 40% to 60%, while Nvidia's stands at 50% to 70%.

Tom Sosnoff, co-founder of thinkorswim and CEO of tastytrade, told CNBC that SpaceX could surpass Tesla and Nvidia to become the market's leading options stock. He is widely known for helping introduce options trading to US retail investors decades ago.

Sosnoff added that investors may want to wait a day or two for pricing to become more efficient. Early option prices are likely to be high, and the market could show signs of overheating.

Kim Jung-a, guest reporter, Hankyung.com, kja@hankyung.com