SpaceX is going public on June 12th. The price gets set on June 11th. They’re looking to raise $2 trillion.
Brandon Chapman just laid out why this might be the beginning of the end for this rally.
Here’s the math. Nvidia (NVDA) peaked as a $5 trillion company. SpaceX is asking the market to allocate nearly half that amount in a single offering. That cash has to come from somewhere.
Retail margin debt is already at record highs. Savings rates are not picking up the slack. So when 30% of the SpaceX offering opens up to retail investors, the funding has to get pulled out of existing positions.
Brandon thinks long-term SpaceX insiders are using this IPO as a cash-out event. Anyone big has already been involved for years. The retail tranche is unusual at this scale and tells you something about what the deal actually needs to get done.
In tonight’s video, Brandon walked through the institutional option flow that’s hedging this exact scenario:
82,000 American Airlines (AAL) puts bought for $1.10, an $8 million single trade targeting $14 on downside oil shock risk
20,000 EEM puts bought at the ask for $2, a $3.5 million institutional bet on emerging market weakness
25,000 KRE put spreads loading downside on regional banks ahead of potential Kevin Warsh rate uncertainty
3,515 JP Morgan (JPM) July 2nd 275 puts in a single block trade with Bank of America (BAC) flow running 45% at the ask
The S&P sat pinned at 7,500 today on positive gamma. Brandon took a speculative short into the close looking for a fade. The bigger story is what institutions are doing while price action stays bottled up.
Oil is the wild card. Crude dropped 4% today. The S&P went nowhere. The futures curve sits in steep backwardation, pricing in tightness that has not gone away.
If oil rebounds while $2 trillion gets siphoned out for SpaceX, the downside hedges Brandon flagged today start paying off in a hurry.
Video Length: 00:16:41
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