Daily Options Income Strategy | With the "AI Narrative" tailwind, can SPCX successfully break through key support and resistance levels?

I. Market Barometer

The three major US stock indices closed higher in the previous trading session, $S&P 500 Index (.SPX.US)$ hitting new highs, primarily because PPI data came in below expectations, alleviating concerns about interest rate hikes; $SpaceX (SPCX.US)$ After surging 35% over the past five days, it reversed course yesterday with a 3.33% pullback. The recent high of $149.6 failed to break through the $150 resistance level. How can we use options to trade the key bullish/bearish pivot point under the influence of the "AI Narrative"?

II. Watchlist Highlights

SPCX: Did the negative impact of lock-up expiration turn into a short squeeze? Pullback after a 35% surge in five days

SPCX closed down 3.33% in the previous trading session at $141.29, with a turnover of $17.128 billion and a turnover rate of 7.758%. The volume ratio was only 0.632, indicating concentrated selling pressure but limited willingness to chase short positions.

From a technical perspective, SPCX has experienced a volatile "V-shaped reversal + secondary rally" trend over the past month:It once fell to the $105 area in late July, forming a阶段性 low. Subsequently, it surged 9.43% on August 4 with heavy volume, and soared another 15.83% on August 7, rising from around $108 to above $146 in just a few days.

The stock price spiked and then retreated in the previous session, with the closing price of $141.29 near the 5-day moving average. The short-term resistance lies at the psychological barrier of $150, corresponding to the August 12 high of $149.60. Key support levels below are at $139 (recent dense trading zone) and $133 (closing price before August 10). The stock is currently in a consolidation phase following a sharp rise, with trading volume shrinking significantly compared to previous days, intensifying the short-term battle between bulls and bears.

Wall Street's biggest fear—the initial wave of lock-up expirations—has been digested.On August 6, the first lock-up period restricting early investors from selling shares officially expired. Contrary to the market's widespread expectation of a sell-off, SPCX's stock price surged 35% in just five trading sessions following the unlock.

As of press time, short-selling data shows that short positions have dropped from a previous peak of 30% to approximately 18%. Although the recent rise in share price has led to a slight increase in the short interest ratio, it remains significantly lower than before.

Musk's aggressive AI narrative is reshaping the valuation framework, with investors beginning to reprice the stock using "computing power infrastructure" logic.In his speech on Tuesday, Musk explicitly stated that artificial intelligence will account for 99% of SpaceX's valuation within five years, and AI business revenue will surpass all other businesses by September. The Q2 financial report showed that AI business revenue reached $2.561 billion, a year-over-year increase of 247%. The reshaping of the AI narrative is attracting investor groups who were previously skeptical of the aerospace narrative.

Regarding major bank perspectives, there are currently 30 analysts covering SPCX, with 80% giving a "Strong Buy/Buy" rating, 13.33% holding a "Hold" rating, and 6.67% recommending a "Sell." The average Wall Street target price is $237.04, with the highest target at $800 and the lowest at $75, indicating significant divergence and reflecting that the market has not yet reached a consensus on pricing SpaceX's long-term value.

3. Options Premium Collection Strategy

1. Cash Secured Put

Sell 1 contract of $SpaceX (SPCX.US)$ 260904 123P, Estimated Margin Required (for reference only): $12,300

Opportunity Rationale:

For investors who acknowledge SpaceX's long-term "AI computing power infrastructure" narrative but have not yet established positions, the current rapid rebound in share price poses significant risks of chasing highs in the short term.

By selling put options, investors can earn premium income in a high implied volatility (IV) environment if the stock price consolidates in the current high range or continues to rise. If the stock price pulls back to around $120 due to subsequent lock-up expirations or short-term profit-taking, there is also an opportunity to establish positions at a price with a greater margin of safety.

2. Covered Call

Hold 100 shares $SpaceX (SPCX.US)$, Sell 1 contract of SPCX 260904 165C

Opportunity Rationale:

For investors already holding SPCX and facing stock price volatility, the short-term price has risen above $140, but the $150-$160 range still faces technical pressure from previously trapped shares. The second batch of lock-up expirations will occur on August 20. Although the first round of expirations performed better than expected, the continuous supply from ongoing expirations may still trigger phased volatility.

If investors are bullish on the long-term "AI + Aerospace" narrative but concerned about the short-term lock-up expiration window and volatility following the rapid rebound, they may consider selling call options. If the stock price oscillates repeatedly at current levels, premium income can gradually reduce the holding cost. If the AI business continues to exceed expectations or the second batch of lock-up expirations is absorbed, driving the stock price to break through $165 and resulting in assignment, it effectively amounts to realizing phased profits at a key resistance level.

IV. Risk Management Advisory

Although seller strategies have a high win rate, investors must still implement proper risk management:

– Position management is everything.: The biggest risk for option sellers lies in black swan events. It is recommended that margin allocated to any single underlying should not exceed 20% of total capital. Never sell options beyond your capacity to absorb losses just for the sake of collecting higher premiums.

– Covered Call and Timely Rolling: When a covered call becomes deeply in-the-money (i.e., the stock price far exceeds the strike price), if you remain bullish on the underlying stock, you should decisively 'roll' the position—buy to close the current option and simultaneously sell a longer-dated call with a higher strike price—to avoid having your shares called away at an unattractive price.

– Cash-secured put options: Beware of 'left-tail risk': For cash-secured puts, if the stock price crashes due to fundamental deterioration (rather than a normal pullback), don’t hold on stubbornly. In such cases, exit with a stop-loss or roll the position down to buy time while waiting for volatility to normalize.

Make good use of the Options Seller Hub to understand income strategies for selling options and earnOption premiums！

Options Risk Disclosure

An option is a contract that gives the holder the right—but not the obligation—to buy or sell an underlying asset at a predetermined price on or before a specified date. Option prices are influenced by multiple factors, including the current price of the underlying asset, the strike price, time to expiration, and implied volatility. Implied volatility reflects the market's expectation of future volatility over the life of the option and is derived by back-solving from the Black-Scholes option pricing model. It is commonly viewed as an indicator of market sentiment. When investors anticipate higher volatility, they may be willing to pay more for options to hedge their risk, leading to higher implied volatility. Traders and investors use implied volatility to assess the attractiveness of option prices, identify potential mispricings, and manage risk exposure.

Disclaimer

This content does not constitute an offer, solicitation, recommendation, advice, opinion, or any guarantee regarding any securities, financial products, or instruments. The risk of loss in trading options can be substantial. In certain circumstances, your losses may exceed the initial margin deposit. Even if you place contingent orders, such as 'stop-loss' or 'limit' orders, there is no guarantee they will prevent losses. Market conditions may render such orders unexecutable. You may be required to deposit additional margin on short notice. If you fail to meet the required margin within the specified timeframe, your open positions may be liquidated. Nevertheless, you remain fully responsible for any resulting deficit in your account. Therefore, prior to trading options, you should thoroughly study and understand options and carefully consider whether such trading aligns with your financial situation and investment objectives. If you trade options, you should become familiar with the procedures for exercising options and handling expiration, as well as your rights and obligations upon exercise or expiration. Options trading involves substantial risk and is not suitable for all investors. Investors should carefully read 'Characteristics and Risks of Standardized Options' before engaging in any options trading strategy.

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