Episode summary
We Asked a 20 Year Options Trader What Happens When the Largest IPO in History Meets a Massive OPEX
Excess Returns
· · 1 hr 8 min · Hosts: Brent Kochuba, Jack Forehand
Summary
The discussion centers on how the SpaceX IPO could distort trading across the market before fundamentals matter much at all. The guest argues that the first days of trading are likely a pure flows game: lockups, index inclusion, dealer hedging, and short-dated call buying could drive a gamma squeeze, especially given how tight the float is and how much attention the deal is getting. He also says SpaceX may end up trading more like a liquidity event than a valuation story, at least initially.
The guest ties the IPO to recent weakness in mega-cap tech, suggesting some of the selling in names like Nvidia, Apple, and Tesla may have been cash raised to participate in the offering. He points to unusual negative delta flows in single stocks even as broader index flow held up better, and he thinks that dynamic may have contributed to the market’s recent spasm.
Looking ahead, the guest sees a crowded setup around June OPEX, VIX expiration, and FOMC. He highlights 7,400 on the S&P 500 as a key downside level and says a move above 7,500 could keep the index pinned into expiration, while the window around June 17-18 could amplify volatility if oil, Iran headlines, and Fed expectations all shift at once.
Key takeaways
- The guest says SpaceX is initially a flows-driven trade, not a fundamentals-driven one, because liquidity, lockups, and index mechanics matter first.
- He expects SpaceX options to draw fast retail and dealer activity, which could create a gamma squeeze if call buying is heavy enough.
- The guest thinks some recent weakness in mega-cap tech may have reflected portfolio funding needs for the IPO rather than broad bearish conviction.
- He flags 7,400 on the S&P 500 as the key downside line where dealer flows could turn more negative.
- He sees June 17-18 as an unusually important volatility window because VIX expiration, FOMC, and OPEX are clustered together.
- The guest argues that falling oil could soften the inflation impact of Middle East headlines and change how markets react to the Fed meeting.
Notable quotes
“Like that is literally irrelevant right now. I mean at the beginning of trading on SpaceX like this is a flows game based on who has to do what”
“You could gamma squeeze this thing I think pretty easily. Uh which is you know a very interesting prospect here I think uh over the next week really”
“What caused the spasm last week was the evisceration of super expensive calls. It wasn't that people were like, I want puts”
“if we lose 7,400 now, we move into this what I call a flat to negative gamma regime”
“the options market, it's going to be interesting because do people sort of pile in into shortdated calls and try to, you know, FOMO this thing and squeeze it right off the bat”
How the episode opens
What's interesting about SpaceX too is like guys like me, we we love like fundamental data and all that. Like that is literally irrelevant right now. I mean at the beginning of trading on SpaceX like this is a flows game based on who has to do what.
There's that liquidity demand. You could gamma squeeze this thing I think pretty easily. Uh which is you know a very interesting prospect here I think uh over the next week really um g given the attention this thing is getting and these liquidity dynamics.
I have not seen anybody talking about these liquidity dynamics Jack. So, uh, I think this is a unique angle that we're talking about here. What caused the spasm last week was the evisceration of super expensive calls.
It wasn't that people were like, I want puts. It was like, I I got to puke out of these calls. And that's that was what what drove the craziness of of really the last week.
To the downside, where you really want to start watching out is if we lose 7,400 now, we move into this what I call a flat to negative gamma regime, which would be red on this map. That's where the dealer flows start to sell into market weakness and that's where things can get kind of ugly.
So Brad, it's June 12th, 2026. We're we're just after noon and SpaceX is live and up up around 20%. — That's right. Uh my dentist friends are texting me asking me what SpaceX is going to do. So you know what kind of event this is. It's a it's a big, you know, worldwide event here. Uh I'm going to see my mother later later and if if she asks me about SpaceX, I might have to short it.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- spacex ipo impact
- options expiration
- dealer gamma and flows
- gamma squeeze
- vix expiration and fomc
Companies and tickers mentioned
- JPM
- SpaceX
- Core1M
- JPMorgan
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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