Market speculation around SpaceX surged this week after ZeroHedge argued that the debut of SPCX options could trigger a gamma squeeze, potentially driving the stock as high as $400 under extreme conditions. The scenario remains theoretical, with no confirmed data yet showing that such dynamics are unfolding.
Early trading fuels momentum narrative
SPCX rose more than 25% on its first trading day, pushing SpaceX’s valuation above $2 trillion. Overnight indications briefly touched $230, though those levels did not reflect official closing prices or sustained demand.
The stock’s structure is central to the debate. A relatively small float means limited shares are available for trading, making the price more sensitive to concentrated buying. That dynamic can produce volatility more typical of smaller companies rather than large-cap firms like Nvidia or Microsoft.
Public filings confirm that only a portion of SpaceX’s equity was made freely tradable in the IPO. Combined with strong attention around Elon Musk, this setup has amplified short-term price swings in early sessions.
Options launch could reshape price action
SPCX options are expected to begin trading as soon as Tuesday, introducing a new layer of activity that could significantly influence the stock. Traders often target low-cost, out-of-the-money call options, which can force market makers to buy shares to hedge their exposure.
This hedging activity is the basis of a gamma squeeze, where rising demand for call options leads to incremental share purchases, reinforcing upward momentum. If sustained, that feedback loop can push prices far beyond levels justified by fundamentals.
ZeroHedge estimates that, in such a scenario, SPCX could approach $400 per share. That would imply a fully diluted valuation near $5.2 trillion, roughly in line with Nvidia, though supported by very different underlying business conditions.
Key conditions remain unproven
Despite the attention, the mechanics behind a gamma squeeze depend on several variables that are not yet visible in the data. These include option volumes, open interest in out-of-the-money contracts, implied volatility, and the scale of hedging activity.
Without confirmation across these metrics, the $400 projection remains an extreme case rather than an active trend.
Data cited from Vanda Track showed SPCX led U.S. single-stock net buying for two straight days, including $93.8 million on one session and as much as 73% of total individual stock inflows. However, these figures have not been independently verified across broader datasets.
At the same time, flows into leveraged and inverse ETFs such as SQQQ and SOXS suggest that this activity may be concentrated rather than part of a broader return to risk-taking across equities.
Comparison with Nvidia highlights disconnect
Comparisons between SPCX and Nvidia have emerged due to similar headline valuations, but the underlying drivers differ sharply. Nvidia’s valuation reflects established revenue growth and demand tied to artificial intelligence, while SPCX’s current trajectory is shaped by trading dynamics, liquidity constraints, and expectations tied to the options market.
Gamma squeeze mechanics draw historical parallels
The current discussion echoes the GameStop episode in 2021, when aggressive call buying helped drive shares from roughly $17 to over $500 at peak levels. That event illustrated how options-driven flows can temporarily overwhelm traditional valuation frameworks.
As with that case, the same forces can reverse direction. If call buying slows or positions unwind, market makers may sell shares, removing a source of upward pressure and increasing the risk of sharp declines.
Focus shifts to incoming options data
Attention now turns to early options market signals following the launch. Traders will monitor several indicators closely:
- Call option volume and open interest, especially at higher strike prices
- Changes in implied volatility alongside price movement
- Evidence of increased hedging through rising share purchases
- Liquidity conditions in the underlying stock
Exchanges such as Cboe, which processed a record 3.8 billion contracts in 2024, highlight the scale at which derivatives activity can influence individual stocks.
Whether SPCX moves toward the high-end projections will depend on how these indicators develop in real trading conditions. Until then, the gamma squeeze narrative remains a possibility rather than a confirmed market trend.
Curious how macro forces and institutional flows drive squeezes like SPCX? Explore evolving market structure and adoption trends next.
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